Tag Archives: NHB

Finance Ministry working modalities to revive real estate

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, National Housing bank, NHBTrack2Realty: The Finance Ministry is reportedly working on the modalities to revive the real estate sector. According to ministry sources, the move is aimed to ensure that stalled projects get bank sector financing. The move, which is expected to help revive growth, is likely to be decided over the coming weeks.

“The main aim is to provide credit to unfinished real estate projects, especially those in the residential sector, so that they can be completed and find buyers,” says the source. Bank credit to the housing sector has grown by only 12.1 per cent year on year as per latest RBI data. This is far lower than the 15.9 per cent growth rate of aggregate bank credit.

The issue was discussed by Finance Minister P Chidambaram last month when he held a review meeting with heads of public sector banks and financial institutions. Sources said that the Indian Banks Association (IBA), which is the umbrella organisation for banks, has already submitted a report on unsold real estate projects.

Bankers are understood to have suggested proposals such as lower provisioning in the lending norms for banks or even permitting loans for specific projects.

On Saturday, Dec 8, the National Housing Bank Chairman and Managing Director RV Verma said he will provide a Rs 9,000 crore refinance assistance to institutions in the home loan business till next June. Speaking on the sidelines of National Real Estate Development Council convention in New Delhi, Verma said he is confident of meeting the target.

Chidambaram had earlier also raised the issue of reviving the real estate sector, which is a large employment generator in the economy. In an earlier meeting in August with bank chiefs, he had asked them to put pressure on real estate firms to cut prices of projects. But bankers have expressed helplessness and said most developers are unwilling to lower prices.

Economic growth slowed to a decade low of 5.3 per cent in Q2 of the fiscal. While the construction sector grew marginally higher at 6.7 per cent in the July to September quarter of the fiscal, as against 6.3 per cent in the same period a year ago, analysts point out that private consumption has slowed.

NHB to decide on pre-payment waiver soon

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, National Housing bank, NHBThe National Housing Bank (NHB), regulator in the realty finance sector, is expected to take a decision soon on whether or not there will be a complete waiver of all pre-payment charges on floating-rate home loans.

“The decision will be in the best interest of the borrowers,” NHB Chairman and Managing Director R V Verma has said. He did not rule out a difference in view between RBI and the NHB on the matter, hinting at a “more efficient” pricing structure.

Verma didn’t specify whether the pre-payment charges would be banned. However, he said, “Borrowers should not be restrained from exercising the option of pre-paying their loans.”

The RBI recently issued an advisory that banks should waive pre-payment charges on floating-rate home loans; a policy decision is yet to come on this. The RBI decision will be for banks and NHB will decide for housing finance companies. Banks have sought time to respond to this RBI proposal.

Banks and housing finance companies will have to factor in different issues before taking a decision. Verma added, “We are looking at the best possible way to resolve the matter. We are taking stock of the profile of the liabilities involved on the principle of a free market.” For instance, a more efficient pricing model could be something to look at vis-a-vis pre-payment charges, he said, without clearly stating the NHB stand.

Housing Development Finance Corporation Chairman Deepak Parekh, speaking at a roundtable organised by NHB on housing finance issues, opposed the RBI proposal on a complete waiver. Parekh said there could be serious problems if there was one. These charges, he said, were a source of income for the banks, and these should not be stopped.

Parekh urged regulators to realise there may be greater ‘substitutional’ housing finance and not ‘incremental’ housing finance taking place, if prepayment charges were completely waived. Verma, however, believes it is obvious the lending industry would oppose such a ban.

The charges on pre-payment levied in some banks range between one per cent and five per cent of the loan due. As much as 98 per cent of loans given by banks come in the floating-rate category.

NHB residex shows Chennai gallops ahead of 15 other realty markets

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, National Housing bank, NHBEver since the National Housing Bank (NHB) started preparing residex – an index for tracking the prices of residential properties in 2007, Chennai has been in the news for steep increase in residential prices.

Over the past four years, housing stock prices have risen 2.18 times in Chennai, say NHB figures. But for a slight dip in prices between July and December 2008, primarily on account of the global meltdown, residex has been steadily heading northwards in Chennai.

The city overtook Kolkata, another overheated market a year ago. Over the past four quarters until March 2011, Chennai has topped the NHB survey, which has 15 other cities. Between January 2010 and March 2011, when the latest residex was released, apartment prices in the city have increased by close to one-third.

The only other major city to record a 30% increase in price is Mumbai. However, two smaller cities marched ahead of Chennai with Lucknow (40%) and Ahmedabad (46%).

There is hardly any place in Chennai’s prime locality of 20 km radius where prices have not shot up by at least Rs 1,000 per sq ft since January 2010. The cost of a two-bedroom apartment even in places like Maduravoyal or Virugambakkam that lie in the fringes of the city is Rs 40 lakh and above. Obviously, they are out of reach for middle-class families.

Even for the upper middle class, buying a house in the core city is becoming difficult. S Sundaresan, a senior bank employee said, “One should have a take home salary of Rs 80,000 and above to become credit worthy for buying a house and that too in the fringes of the city.”

Builders point out that demand is driving the prices northwards. The realty market leader DLF has also entered Chennai market with a couple of high-end residential and commercial property. The company believes demand has always been there and DLF has just been there to cater to the aspiration level of the globe trotters who want the best of amenities in Chennai.