Seeks lower cost of funds for Real Estate Sector to fuel housing & industrial growth
The Confederation of Real Estate Developers’ Associations of India (CREDAI ), the apex body for private real estate developers in Indiaexpressed disappointment at RBI decision to maintain status quo on key rates even when the inflation is already under control and there is a need to focus on fueling the housing growth by reducing the rates.
CREDAI advocated for a reduction in interest rates to facilitate lowering of entry barrier and spur demand for the real estate sector and emphasized the need to make home loan rates independent of inflation expectations, keeping in view the mission to provide housing for all by 2022.
Speaking on the development Mr. C Shekar Reddy President CREDAI- National said," The RBI decision to keep the key rates unchanged will not help the real estate sector development. Presently the overall inflation is under control as expected by the RBI, the crude oil prices are also low, the overall business requires an upword momentum.
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| C Shekar Reddy, President CREDAI- National |
A reduction in policy rates at this juncture would have a significant impact in boosting the industry and facilitating growth. Even the housing & finance ministry are advocating that the interest rates should be brought down for the developers and end user to promote the mission “Housing for all”. The real estate sector has been struggling with high cost of labor, material & funds along with the moderate demand over the last few months.
There is a strong need to lay out clear policy and lower the cost of borrowing to help developers focus on development and increase the supply of homes. There is already a shortfall of 18.78 million units in the urban areas and is expected to gear up to meet the expected demand for housing of 30 million units by 2022 to ensure Housing for all.
To achieve the mission ‘Housing for all’ a stimulus is required in the form of interest rate cuts, interest subvention and tax cuts to propel the demand and encourage supply for housing”
Adding to this Mr. Reddy said, “ Though there are favorable initiatives which the government has introduced focusing on increasing real estate sectors growth the lending rates are still very high and limit the eligibility of the home buyer. We are looking forward to devising a formula independent of the prevailing inflation expectation to provide home loans at reduced rates to ensure increased eligibility.
At lower and a larger participation of the youths towards purchasing a home early in their career to stimulate the demand for housing, taking advantage of the long term tax benefits and the present low price of the real estate in the country”.
The housing sector is poised to grow manifold in the next decade and a half and will require a capital investment of about $1.2 Trillion. RBI should liberalize the norms, increase the lending to the real estate sector by 3 to 4 folds to ensure “Housing for all” by 2022.
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