New Delhi: Rising interest rates are not likely to dampen the demand for the housing sector, feels economic think tank NCAER.
Increasing interest rates are less likely to slow down the housing demand and consequently may raise the real estate prices further, NCAER said in its Quarterly Review of the Economy released recently.
Citing the reason for the rise in prices, the report said, there is a shortage of homes in every segment of society and with rising income and improvement in quality of houses, the prices are bound to rise.
Home loans over one last year have moved quite substantially as there is sharp increase in credit to deposit ratio of commercial banks.
The credit to deposit ratio has gone up from 0.62 in 2004-05 to 0.70 in 2005-06. However, it remained unchanged in the first quarter of the current financial year, the review said.
According to industry estimates, home loan disbursement was pegged to grow by 18 per cent to Rs 1,00,000 crore.
However, leading global wealth manager Morgan Stanley has said that there may be a slow down in the high-end real estate, which would eliminate speculators but not the actual users.
India may witness a slowdown in volume but not in prices, it said.
Despite decline in the transactions, the prices have not gone down, it said, adding that there would be no depression in near future.
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