The RBI Governor is gaining admirers amongst the builders, by kicking off the festive season with rate cuts and providing a booster to the home sales. State Bank of India has passed on a fair bit of the reduction to borrowers.

Realty price have come down in the past few months and is expected to soften further.  The buyers are looking forward to discounts of 5-7 per cent for the bookings made during this season. The recent increased interest from overseas PE funds and RBI’s move to permit rupee dominated external commercial borrowings will help ease liquidity.

Realty index of listed stocks (BSE Realty Index) moves in tandem with inflation and mark trends ahead of the latter, the current trends will point to the future situation.

For the home buyer, while the benefit from the rate reduction over the past six months may range between a 3 to 6 per cent reduction in EMI (equated monthly installment), a reduction of 5 per cent in property prices coupled with a proportionate reduction in the borrowing amount, can expand the benefit to over 10 per cent.

Another way to look at this is that a borrower may be able to reduce his loan tenure by about 5 years as a result of the combined impact of realty price reduction and the rate cut.

Are the developers listening? And prepared to make use of the situation?

Source : Economic Times