A significant drop of 20% has been seen in home loan transactions
in the past few months, which is a clear indication of an awaiting
correction in property prices.
Increasing home loan interest rates are believed to be one of
the major factors accountable for the scenario. Industry watchers
have been foretelling a price correction for long which, however,
is nowhere in the picture.
If talk about metropolitan cities, the rate has fall down by
10% whereas it has slipped 15-20% in the smaller locations, says
Rajiv Sabharwal, Senior GM-Retail Assets, ICICI Banks.
A price correction in smaller cities including Chandigarh,
Jaipur, and Bhopal is already on its way. But big cities like
Mumbai are better off. Here,
the transactions have gone down by 10% as compared to the rate
in the last quarters.
A drop in prices appears to be the need of the hour to provide
required boost to home loan transactions. Also, there will be
certain discounts which are likely to come into effect in near
future, says Sabharwal.
ICICI Bank expects the home loan market size to increase by 25%.
What has been remained to see is whether real estate prices will
come down or not.
