NDORE: A slowdown in economy, coupled with high interest rates have forced people to cut down on spending hitting the once booming realty sector hard. Real estate developers in the state are facing problems as inventories pile up and there are no takers.
The situation has reached a stage where realtors want banks to lower lending rates while the bankers want realtors to lower prices. Bankers have refused to budge on the issue of lowering lending rates stating that slackness in realty sector is due to high prices and poor quality offered by developers.
An estimate says that there are about 30-40,000 houses under construction by various big developers in Indore at the moment. Managing director of an Indore-based real estate firm, Silver Lake Vista, Kunal Jhaveri, said, "The cost of construction has gone up and hence it is difficult for us to lower prices of properties offered by us. Now it is up to banks to lower their interest rates on home loan so as to woo buyers".
President of Indore chapter of Credai, Vijay Mirchandani, said, "We do believe that interest rate on home loans will come down by 50 basis points next year. It's important, keeping in view the increasing demand for home loan among people hailing from communities like economically weaker section and lower income group."
Vice president of Credai in Bhopal, Manoj Singh Meek, said, "In case the interest rate on home loan comes down, then the demand for homes will increase for sure".
DGM of IDBI Bank, K L Subedar, said, "We are cautious while financing the real estate projects directly. Rather we want to extend home loans to the end-users". Elaborating it, he said unlike real estate developers, end-users rarely turn defaulters for a simple reason that they use the loan for getting home.
As per an estimate, average take-off of home loan in Indore alone was at Rs 1,000-1,200 crore per month. IDBI bank claims to having lowest interest rate on home loans at 10.25%. Though State Bank of India offers an interest rate of 10.10% upto Rs 30 lakh, its rate of interest goes as high as 10.40% beyond that amount. However, IDBI charges a flat interest rate of 10.25% on all amounts.
CMD of Indian Overseas Bank, M Narendra, said, "The real estate developers must ensure that they not only go for quality projects, but also the fact that they keep their price at a reasonable and competitive level. Above all, they must deliver their property to the buyers in time".
The average ticket size for home loans in Indore stands at Rs 10 lakh. CMD of Punjab National Bank, KR Kamath, told TOI, "that the interest rate on home loan was directly related to the level of inflation. So, one can see the fall in interest rate only in case the inflation comes down."
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