The latest interest rate hike by the Reserve Bank of India (RBI) is bound to push up the price of housing loans as well as the residential apartments as real estate developers on Tuesday, September 25, said they have no choice but to pass on the increase in cost of funds to consumers.
“RBI has put us in a sorry situation. It is a vicious circle of higher input cost, higher borrowing cost and higher property prices. We are bound to pass on the increased cost of funds to our customers,’’ Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman, Pradeep Jain said.
Jain said the rate hike will further tighten the source of funding required for running the business. However, he said increase in interest rate is unlikely to impact demand as there is a shortage of housing in the country.
“We urge RBI not to hike rates any further as that will certainly choke industrial output, thereby putting a halt to economic growth,’’ Jain, who is also the Chairman of Parsvnath Developers, said.
Expressing similar sentiments, CREDAI national president Lalit Kumar Jain said the frequent rate hikes will prove to be counterproductive since the move will have a cost-push impact rather than proving to be an inflation control measure. The rates of interest are bound to zoom and this will further weaken the sluggish demand in real estate sector.
“There is an urgent need on behalf of the government to take immediate steps to initiate reforms in real estate like transparency and single window clearance system,’’ he added.
