Indias five-year property boom is coming to an end as the supply of housing increases, borrowing costs rise and a stock market rout erodes buying power, according to executives at two mortgage lenders. Prices across India may drop as much as 15% in the coming months, said Keki Mistry, vice chairman of Housing Development Finance Corp, Indias largest provider of home loans.
Gagan Banga, chief executive of Indiabulls Financial Services Ltd, said thatprices may fall as much as 20%. Indias central bank signaled it will raise borrowing costs further after increasing rates this week to the highest in more than six years, curbing demand for loans.
The nations property market may avoid the meltdown seen in Spain, the UK and US because of lower indebtedness and a housing shortage estimated by the government at 24.7 million units, the executives said. Due to the state of the equity markets, many investors who would have bought a second or a third house are abstaining from doing so, Mistry said in a June 24 interview in Mumbai. Genuine home buyers who are looking to buy a house for self occupation will continue to buy. Mistry was speaking hours before the Reserve Bank of India raised its repurchase rate by 0.5 percentage point to 8.5%.
More : timesofindia.indiatimes.com
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