New Delhi: A day after RBI governor Raghuram Rajan advised builders stuck with unsold inventories to cut rates, realtors' body CREDAI today said there is no scope to reduce housing prices and demanded that interest rates on home loans as well as taxes should be reduced to boost demand.
"While we respect the RBI governor's concern over kick starting the real estate sector, it would be prudent to say that from the developer's side that a substantial reduction in prices has already happened across the country," CREDAI president Getamber Anand told PTI.
"Any further decrease in sale prices would mean an out of pocket expense for the developers thereby acting as the last nail in the coffin of an industry which contributes so much to the economy and employment at large," he added.
Mr Anand said housing prices have gone down by 15-20 per cent on an average in last two years across India, while input costs have risen by 15-20 per cent.
The Confederation of Real Estate Developers' Associations of India (CREDAI), which has about 10,000 realty developers as members, sought that government should rationalise taxes and circle rates while interest rates on home loans should be cut.
"It is now largely up to the state to rationalise taxes, ready reckoner rates and streamline the approval process to bring down property prices and provide relief to the end user.
A rate cut in home loans is the need of the hour to relive the home buyer of the huge burden of mounting EMIs," Mr Anand said.
Real estate sector, particularly residential segment, is facing a huge slowdown for last 2-3 years, resulting in significant delays of up to 6 years in completion of projects.
On Thursday, Reserve Bank Governor Raghuram Rajan exhorted realty developers stuck with high inventories to cut their rates even as the country's largest lender SBI sought RBI's nod for cutting home loan rates.
"I do believe that if real estate developers who are sitting on unsold stocks bring down prices, that will be a very great help to the sector because once there is a sense that prices have stabilised, more people will be willing to buy," Dr Rajan had said at the second SBI Economics and Banking Conference held in Mumbai.
According to a report by property consultant Knight Frank India, over 7 lakh housing units remain unsold in eight major cities and it will take more than three years to exhaust the inventories.
The National Capital Region (NCR) market alone had 1.9 lakh unsold homes as of June.
These cities are Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Chennai, Hyderabad and Ahmedabad.
Housing sales dropped by 19 per cent and new launches by 40 per cent during January-June 2015 in these eight cities as compared to the year-ago period.