Property prices to go up: Builders

Apex realty body CREDAI on Tuesday saidthe RBI's decision to hike key policy rates will hurt both home buyers anddevelopers badly, as the cost of borrowing will go up, leading to an increasein housing prices.

The Confederation of Real Estate Developers' Association ofIndia (Credai) said the RBI's move to tighten liquidity to control inflationwas "not appropriate" and the apex bank should rather take measuresto address supply side constraints.

"The move has come as a surprise to us. We wereexpecting a moderate hike of 25 basis points, but hiking rates by 50 basispoints is going to dampen the growth," CREDAI Chairman Pradeep Jain said.He is also Chairman of Parsvnath Developers.

"This will make cost of funds expensive for bothdevelopers and buyers... As a real estate developer, we are not left with anychoice but to pass on the same to our buyers, resulting in an increase inproperty prices, he added.

On housing prices, Jain said, "It is bound to goup," but refrained from providing an estimate of the expected rise.

When asked about the impact on housing demand, he saiddemand would not be impacted much, as prospective home buyers would purchaseflats of lesser value than what they earlier had planned.

Jain pointed out that business environment across industrieshas become complex because of hardening of interest costs, coupled withconstant increases in input costs.

"We request the RBI not to increase the rate to anyfurther extent. Instead, we appeal to RBI to stimulate measures for an improvedsupply chain management," he said.

Echoing similar views, CREDAI President Lalit Kumar Jainsaid: "The cost of funding is going be higher as banks are bound toincrease their lending rates."