New Delhi: After a sharp jump of over 100% in past two-three years, housing prices may soon cool down on concerns related to rising interest rate and a possible over supply in the market, industry players believe.
According to a senior company official at a leading real estate developer, prices would certainly come down in middle income segment, but the companies are shying away to admit this emerging trend as this could adversely impact their business.
“The rise in interest rate will put a major strain on middle income buyers, where prices vary between Rs10-30 lakh per housing unit. They are really squeezed as the EMI has gone up by all most 50% in the last three years,” he added.
Similar views are being echoed by a number of real estate players and housing finance companies.
The country’s largest home finance firm HDFC’s managing director Keki Mistry told analysts at a Realty and Construction Conference organised by brokerage firm Enam Securities that there could be a drop in housing prices over the next one year.
“There could be a drop in real estate prices in the next 12 months as developers might not be able to sustain higher prices any longer due to low financial support from the banks,” Mistry said.
Real estate developers had also witnessed a slowdown in sales in May-September period last year. While they were able to sustain the prices with sufficient bank lending, the scenario has changed this time around, he added.
Even those who does not anticipate any drop in the housing prices do not anticipate any more big-bang rise in the prices going ahead.