MUMBAI: The Reserve Bank of India (RBI) governor Raghuram Rajan’s plea to builders to reduce realty prices to clear the rising inventory is unlikely to cut much ice with the builders. Though approximately 1.76 lakh houses in MMR remain unsold resulting in sales coming down to record levels, builders have expressed their inability to reduce any further. Even Mumbai has an unsold stock of 65,037 houses.
The Confederation of Real Estate Developers’ Association of India (CREDAI), the apex body for builders, said the builders have reduced the rates substantially in recent times. “The onus is now on the state government to rationalise taxes, ready reckoner rates and streamline the approval process to bring down property prices and provide relief to home buyers,” said the spokesperson of CREDAI, which also wants cut in the interest rates on home loans. “A rate cut in the home loans is the need of the hour to relive the home buyer of the huge burden of mounting EMIs (Equated Monthly Installments),” he added.
Analysts, however, point out that it is vexed tangle. “The builders have brought land at exorbitant rates and they are now saddled with high premiums and taxes. It is not possible for them to reduce rates,” said Pankaj Kapoor, CEO, Liases Foras, a leading realty research firm.
“Even the government seems to be adding to the crisis by annual increase in Ready Reckoner rates as well as periodic rise in premiums and taxes. They are in fact reducing the scope of the builders to reduce the prices,” he said.
This year has been the worse for the realty sector as both new launches as well as sales have come down substantially.
Buyers say the prices are still unaffordable and they are waiting for substantial correction in prices. “The rates are too high and beyond our means. The RBI governor is right as the builders need to reduce prices and make houses affordable,” said Sunil Aher, who resides in Kalyan.
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