Home prices eased in last 5 years despite better housing credit growth: RBI

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NEW DELHI: Despite higher housing credit growth and better bank lending rates, house prices in the country have been cooling in the last five years, a Reserve Bank of India (RBI) report said.

According to the Financial Stability Report released by the RBI Monday, the all-India housing price index reduced to 5.3 per cent during April-June, 2018, while housing credit also declined to 15.8 per cent as compared to Q1 FY2015, which stood at around 16 per cent and close to 17 per cent, respectively.

“Housing prices have been cooling in the last five quarters, despite accelerated housing credit growth and favourable bank lending rates,” the report said.

The large pile of unsold homes resulting from tepid demand conditions gradually led to moderation in price increase.

According to property consultant JLL India, housing sales in 2018 is estimated to have risen 47 per cent in seven cities, although on a lower base.

“There has, however, been a pick- up in house sales in first half of fiscal 2019 leading to a reduction in unsold inventory, thereby improving the house sales-to-inventory ratio for major cities,” it said.

In Mumbai, the house sales to unsold inventory ratio stood at 25, while at Ahmedabad it was over 45, in Bengaluru at 40, Chennai at 40, Hyderabad at 70, Kolkata at 18, NCR at around 10 and Pune at 60.

“Notwithstanding improved consumer sentiments consequent to stabilisation of disruptions in the implementation of GST and RERA, the recent spike in launches is mostly driven by government schemes to promote affordable housing,” the report said.

Source: Press Trust of India