Mumbai:
The Reserve Bank has said that genuine buyers are unable to buy homes due to high property prices, once again nudging developers to reduce prices instead of sitting on a pile of inventory.
“Genuine home buyers moved away from the home market due to higher prices and investors stayed away due to the weakening state of the economy,“ the central bank said in its annual report.
The observation in the RBI Annual Report comes within a week of governor Raghuram Rajan's assertion that developers need to reduce prices to clear inventory and encourage individuals to buy homes.
“As economic growth has started to take off, the overall buyer sentiment is expected to rise. Presumably, developers are counting on this to happen and hence holding prices,“ the report said.
“I do believe that if real estate developers who are sitting on unsold stock bring down prices, it will be a great help to the sector because once there is a sense that prices have sta bilised, more people will be willing to buy,“ Rajan had said at the SBI Banking and Economic Conclave here last week.
Rajan's comments were made in response to a suggestion made by State Bank of India's chairman Arundhati Bhattacharya that they should be allowed to offer home loans below base rate, which stands at 9.70%, to kick start economic activity.
The report said that demand for residential properties has slowed down in recent times and unsold stock of residential homes has increased considerably at the same time.
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