Higher Interest Rates to Cause Housing Price Rise
Reserve Bank of India’s decision to raise key policy rates by 25 basis point may cause a price rise in the housing by 5% -10%. It may be recalled that RBI raised the repo rate by 25 basis points which is a the tenth consecutive rise since March 2010.
It is said that the increase in repo and reverse repo rates may cause an interest rate hike for builders in Chennai and other cities which unfortunately would be passed to buyers. But it is widely believed that since the shortage in housing is at all time high the demand may not go south.
However it is felt that if the supply of housing units increase, the demand can be accordingly met and any further raise in housing can be minimal.
(From our Raindrop Correspondent)