The cost of housing can be reined in if the process of getting construction approvals is simplified and adequate supply of property is available in the market when the demand for housing returns, said managing director of Gera Developments and vice president of the Confederation of Real Estate Developers Association of India (CREDAI), Pune, Rohit Gera.
Pointing out that India’s ranking in the ease of getting construction permits had moved just one position higher to 181 according to a World Bank report, Gera said that the government had to make the approval process faster and easier.
“If I can bring supply into the market when there is demand, then prices will not rise. That’s the key. You boost demand and you make adequate supply available in the market,” Gera said.
Stating that the market had adopted a ‘wait-and-watch’ approach, Gera said it was only a matter of time before people began to purchase new flats and homes and that, when demand picked-up, prices would also pick up.
“Because there has been a slowdown, no new major projects have been launched. As a result, whatever existing inventory was available is slowly getting consumed. Hence, when the demand suddenly comes back, we will see an increase in prices because supply will be limited,” he said.
Gera also stated that the market has been waiting for reduced property prices and reduced interest rates. “The real estate sector has yet to see the effect of reduced interest rates because while the Reserve Bank of India has reduced benchmark rates, banks haven’t really transmitted this to the end customer,” he said. “I think interest rates for home loans should come down by another 100 basis points to hover in an 8.25-8.75% bracket.”
Gera also stated that his firm had completed the acquisition of another property which will be developed under the Imperium brand, the approval process for which would be completed by January next year.
He also said that 88% of the inventory in Imperium Grand had already been sold.