Housing prices to see correction soon, says NHB
Some correction in housing prices is likely on account of the rising number of unsold units, RV Verma, CMD, National Housing Bank (NHB), said on Friday. He added that NHB could incentivise the process through reduced refinance rates.
Citing oversupply, Verma said the construction industry can take a project-specific or builder-specific approach to see how they can correct prices. "Projects that are unsold due to the high price perception may see some price correction, partly in the light of the lowering of housing loan rates," he told reporters here, while announcing NHB's annual results for the financial year ended June 30, 2012. However, he did not give any specific timeline for such a correction.
"There is a psychology of oversupply, which will play out during the year in the form of price correction and becoming more market oriented," he added. He said the NHB will plug the supply side gap by looking at reducing refinance rates, especially for those projects that promote innovative practices in the design of building, land management, usage of low-cost but durable material and the latest technologies.
Incidentally, banks, including SBI, HDFC, ICICI Bank, Punjab National Bank and Vijaya Bank, have brought down home loan rates. NHB recently reduced its refinance rates for housing loans up to R2 lakh from 10% to 9%, and for loans of R2-5 lakh from 10% to to 9.25%.
Referring to reports of inventory pile-up, he said measures are being taken by the bank, in coordination with the Department of Financial Services, Indian Banks' Association (a representative body of the banking sector) and the Confederation of Real Estate Developers' Associations of India (the apex body for private real estate developers), to assess the extent of incomplete projects.
NHB posts net profit of Rs.387 crore
NHB posted a net profit of R387 crore in the year through June, up from R279 crore in the previous fiscal, and gross loans and advances of R28,490 crore. The bank's total loan disbursements during the year were R14,454 crore (up 20% from R12,035 in the previous fiscal), out of which the share of rural housing was nearly 39%, aggregating R5,610 crore.
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