Bankers caution realtors against raising property prices

Bankers caution realtors against raising property prices
The Hindu Business Line, July 8, 2009, Page 6

Warning against price hike.

Our Bureau, New Delhi

Leading bankers on Tuesday cautioned real estate developers against raising residential prices, saying that any such move at this juncture would stall recovery in the market.

“Certain top-rung developers have already started increasing prices, especially in mid-income projects, following the recent pick up in sales. Besides, with liquidity no longer a constraint, certain developers are seeking once again to increase their margins,” Mr Deepak Parekh, Chairman, HDFC, said.

He said that the real estate market had just begun correcting itself and it would be “extremely unfortunate if the developers were to increase the home prices at this juncture.” Mr Parekh, who was speaking at Habitat Business Forum event organised by FICCI, expressed scepticism on whether existing developers would stay committed to affordable housing segment.

‘short sighted’

Mr S. Sridhar, Chairman and Managing Director, Central Bank of India, echoed similar sentiments, He pointed out that it would be “short-sighted” if the players were to raise prices thinking that the demand is coming back into the market.

“It is difficult to generalise but as a whole there is some more scope for downward adjustment in prices, or in certain places it should plateau. That will stimulate the demand. If the real estate players revise the prices upwards, it will stall the recovery process,” Mr Sridhar said.

He said that the demand for housing loans had picked up among the banks.