Interest rate hikes hurting builders too Hoooooooo!!!!

Higher interest rate are hurting not just borrowers but property developers as well. That is because builders might be forced to cut prices,

Home Loans are dearer. But now even builders feel the pain. Most developers were holding on to high prices and putting up a brave face for the past three to six months despite interest rate hikes and transactions slowing by up to 25%. Developers now admit it is a tough battle to win and feel they must compromise on prices to boost sales.   

 

"Yes definitely that is a business call that all developers will have to take when he feels that there is something pinching him he will definitely look at a way out," says Mayur Shah, MD, Marathon Realty.

 

With demand decreasing, developers are left with a substantial stock of apartments especially in extended suburbs of the metros. ICICI Bank , India's largest private sector bank, anticipates a slowdown in home loan growth by 10% and that means more pain for the property market.

 

"They will either work on compressed margins or will be in a hurry to sell so that the investment comes home fast," feels Pranay Vakil, Chairman, Knight Frank.

 

While consultants say there may not be a steep slide in property prices, builders who made land transactions at very high prices have turned cautious. Cooling land prices will translate into more affordable housing in the medium term.