Housing Price Increase Has Been Moderate In Past 5 Quarters: RBI
Home sales in India’s key markets might have increased, but the rate at which prices in these cities are growing has been slower in the past five quarters, says a report by the Reserve Bank of India (RBI). The all-India housing price index dropped to 5.3 per cent in the second quarter of the current financial year from 16 per cent in first quarter of FY15. On the other hand, housing credit declined to 15.8 per cent from 17 per cent during the same period.
"House prices have been cooling in the last five quarters, despite accelerated housing credit growth and favourable bank lending rates," the Reserve Bank said in its financial stability report released on December 31. Amid a fall in housing demand, real estate developers saw inventory stock growing. This led to a moderation in housing price increase during this period, says the RBI.
A pick-up in home sales in the first half of the current financial year has, however, resulted in reduced inventory stock, thereby improving the house sales-to-inventory ratio for major cities
According to the Central bank, stabilisation of disruptions in the implementation the real estate law and goods and services tax has also made a positive impact on homebuyers, who are now more willing to invest. However, an increase in new project launches in some cities has little to do with that.
"Notwithstanding improved consumer sentiments consequent to stabilisation of disruptions in the implementation of the GST and the RERA, the recent spike in launches is mostly driven by government schemes to promote affordable housing," the RBI said.
With inputs from Housing News