Governance – Page 29 – FindMyProperty

Due to Demonetisation there are lots of question arising in mind of homebuyers, whether property price will be down or not? Home loans interest rate will increase or decrease in upcoming year and many more. According to today’s scenario some builders are assuming that real estate sector is driven by sentiments rather than reality. It may be possible due to demonetisation, for short period of time real estate market will go down but for long term there will be not affect. For coming 2-3 months property prices may be decrease, you can say this sector is in holiday now. But it will take 6 months to get things settle down. There will be huge change in terms of property price as well as in home loan interest rate.

If customers are waiting to see property price will fall then they should know the truth behind the Demonetisation impact at residential and commercial property. A small developer group said to ET (economic times) that currency recall will help to cut home loan interest rates and drive good sales. This is actually a good move by the government and we do not see any negative impact on the real estate industry.

Reserve bank of India directly moves to soak up liquidity from banks, hike in the cash reserve ratio (CRR) and how it would stabilise markets. These men know that a dip in growth and surge in deposits would force the central bank to lower interest rates sooner than later, pushes up bond rates and soften bond yields.

“A rate cut now is not conflict with cash reserve ratio (CRR) hike since this hike will be ultimately rolled back. The economy is at a stop now, so we should expect a cut. We were always expecting a 25-basis-point (bps) cut in December and another 25 bps later in the monetary, and we are sticking to our prediction” said Indranil Sengupta, chief India economist at Bank of America-Merrill Lynch (BofA-ML). It expects a total of 75 bps cut by September 2017.
Most economists believe a 25-bps rate cut to be a certainty next week as the central bank needs to support small and medium enterprises (SMEs) which have been hit by demonetisation of high-value notes.

CRR Hike an Incredible steps

The CRR hike announced a few days prior was just an extraordinary liquidity-absorbing measure rather than policy rate decision.

There is a widely shared perception that RBI may turn to more sophisticated policy tools to wipe up liquidity rather than impounding incremental deposits as CRR. Despite the fact that many may be hoping for a more aggressive rate cut by RBI in Wednesday’s monetary policy, chances are that the central bank may hold back ammunition for the future as the full impact of demonetisation unfolds by end March.

On 26 November, RBI asked banks to keep all incremental deposits garnered between September 16 and November 11 with the central bank to absorb the avalanche of liquidity in the banking sector after demonetisation was announced on November 8. RBI will survey these measures on 9 December.
Bond yields, which shot up 17-18 basis points soon after the CRR hike, have fallen almost 10 basis points since then.