What can be worse than inability to buy a dream home in a lifetime? Once again Reserve Bank of India has hiked the lending rates. The continuous rise in the interest rates on loans is a harsh slap on a common man’s fate. The Indian real estate industry is deeply affected by the decision of Reserve Bank of India because it’s not the single industry but there are many industries that are associated with it and we cannot deny the fact that in the coming time the pressure will increase not only on individuals but on companies or sectors associated too and that will ultimately slow down the demand.Demand will be affectedThe developers as well as the property consultants are not in favour of this rate hike as it will directly affect the final cost of finished product that means it will be passed on to the buyer’s pocket and if it goes beyond his purchasing power it is sure he will withdraw the decision to buy. This reaction will directly affect the demand and will put the developer in fund crisis condition and the overall real estate sector has to bear this crunch. The heavy investment projects will find fewer buyers due to increase in the property cost.Cost has increased considerablyIf we talk about the input cost like material cost, metal cost, transportation cost, etc has risen 30 to 35 percent in last two years. Apart from these there has been considerable increase also seen in wages in the last two years. All these have put pressure on the real estate industry and ultimately on the last buyer who wanted to buy his dream home. But the fear is that the dream will remain dream for these buyers if the present state of affairs will continue.New problems will arise with rate hikeThe developer want the banks not to pass this hike in rate to them but it is chain reaction and if you are a part of the chain then it is impossible not to be affected by it. This hike can create many new problems like increase in the number of defaulters as the banks are worried about. The EMI’s will increase drastically which has already risen by 12.5 percent in 12 months. Where will it go and how would it be possible to cope with inflation and interest rate at the same time with a hand tight budget for a common man? It may result in poor sales and downfall of real estate demand which is touching the heights of madness today.Where we stand in the world?A systematic hike is ok but repeated rise in lending rates are just unacceptable as it will negatively affect the growth of economy. Indian real estate market is one of the largest in the world and the rate of interest is the highest in India in the world. It is really sad. In spite of being one of the most recognisable economies our system is not working in our (common man) favour.Consequences if no steps are taken
- For a developer the cost of construction, cost of land and the funding cost will go up and with this the finished units will be cost more to the buyer.
- Demand and supply will get imbalanced.
- Property values will go down.
- Investors will think twice before investing as the profitability will certainly go down due to lack of demand and increase in cost. Cash flow in the market will go down.
- The industry may have to face slowdown due to these factors.
- Developers will face a fund crunch for their upcoming projects.
- Other industries that are dependent on real estate sector will also feel the heat and may have to suffer losses.
Time for actionIf proper steps are not taken by Government and RBI then the things will become complex and the economy growth chart will show downturn soon. Major action is required here to curb the inflation but not to contribute in it as the majority of population in India comprises of common man and he needs to be happy and satisfied not to be left to die under the pressure of repayment of loan and inflation monster. The end user’s rights and interests must be protected by taking appropriate steps. All authorities associated with the real estate sector like CREDAI, State level authorities, etc and those who are being affected by the decision of RBI need to join hands and voice for the sake of the industry. Government should try to curb the causes of inflation like corruption, black marketing and improper use of government funds.Ruchi Mahajanзайм на карту без отказов круглосуточновзять кредит онлайн