Genuine buyers were unable to buy home due to high property prices, says RBI

MUMBAI: The Reserve Bank of India ( RBI) has said that genuine buyers are unable to buy homes due to high real estate making a case for developers to reduce the property prices instead of sitting on the unsold stock.

In its annual report, the RBI has said, "Genuine home buyers moved away from the houses market due to higher prices and investors stayed away due to the weakening state of economy"

The observation made in the RBI Annual Report comes within a week of governor Raghuram Rajan comments that developers need to lower prices to sell unsold stock and to encourage individuals to buy homes.

The report says, "As the economic growth has started to take off, the overall buyer sentiment is expected to rise. Presumably, developers are counting on this to happen and hence holding the prices."

At SBI Banking and Economic Conclave, Rajan said "I do believe that if real estate developers who are sitting on unsold stocks bring down prices, that will be a very great help to the sector because once there is a sense that prices have stabilised, more people will be willing to buy."

Rajan comments were made in response a suggestion made by State Bank of India's chairrrman Arundhati Bhattacharya that they should be allowed to offer home loans below base rate- which stands at 9.70% -to kickstart the economy.

The report said that demand for residential properties has slowed down in recent times and unsold stock of residential homes has increased considerably at the same time.