00:05 GMT09 July 2020
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    New Delhi (Sputnik): India is slowly limping back to normality after over two months of lockdown, even as the number of confirmed Covid-19 cases is rising by the day. Construction and retail have been allowed to resume operations.

    An executive at one of India's leading non-banking finance companies (NBFC's) hurriedly sifts through the list of home loan enquiries made early this year before coronavirus.

    He plans to call each of those prospective buyers and try to convince them that since interest rates on home loan have come down due to the liquidity measures announced by the Indian banking regulator Reserve Bank of India (RBI), the time is really right to buy one's dream home.

    Ever since the pandemic hit, RBI has reduced key lending rates twice and deployed monetary tools to ensure liquidity in the market, which has resulted in a reduction in retail loans.  

    Claiming that he had been doing this ever since his office reopened after lockdown, the executive told Sputnik on condition of anonymity: "Rates are very attractive and down by at least 1 percent to 1.5 percent. And real estate developers may also offer attractive deals to push sales." From around 9 percent almost six to eight months ago, home loan interest rates are now around 7.5 – 8 percent.  

    The sector certainly seems to be ready for some traction after a lull during the pandemic. Big players in the real estate sector also feel that low interest rates could give a positive push to sales. 

    But how big will the impact be on house prices? A recent HDFC securities report said that large NBFCs are expecting a house price reduction in the range of 20 percent to 25 percent.

    Industry players believe that a depreciating Indian currency against the dollar might prompt non-resident Indians to buy property in India.

    Real estate developer and President of the Indian industry chamber Assocham, Niranjan Hiranandani said in a tweet on Wednesday, “With interest rates at all-time low, real estate is becoming a very attractive proposition for NRIs.”

    Chairman and Managing Director of realty firm Tulip Infratech, who is also the president of National Real Estate Development Council (Naredco) told Sputnik, “Real estate prices are already very low. Compared with 2012, the real estate prices have corrected by at least 40 percent and are already at a low. However, depending on the condition of the builder and property location, there may be marketing offers from developers.”

    Experts believe that barring marginal discounts depending on the market, a deep discount on the property cost is unlikely. “There may be discounts on move in properties that have been lying idle. Also, going forward we could see more lucrative marketing and funding schemes like subvention schemes which allow booking a property with a 10 percent down payment and paying the balance at the time of possession,” said Mani Rangarajan, COO, Proptiger – a real estate consultancy firm.

    “Measures like a cut in goods and services tax and stamp duty and registration charges on real estate will also boost consumer sentiment in the sector,” Rangarajan added.

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