Press Esc to close
Tuesday 28 June 2016
News updated at 10:17 PM IST
Weather
Max: 27.2°C
Min : 20.8°C
In Bengaluru
Rain lightly

Home prices inflated; aggressive lending dangerous: Parekh

New Delhi, Jun 21, 2013 (PTI)
File Image

Terming the home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh today asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.

Parekh, Chairman of the country's largest housing finance company HDFC, also asked the home buyers to be cautious of 'too-good-to-be-true' offers from the property developers and warned them against schemes where builders claim of paying interest on the borrowers' loans.

The eminent banker also asked the financing companies to stay away from innovative and aggressive loans, including teaser rates where the interest rates rise gradually and lending money to developers at the same rate as being offered on individual home loans.

While lauding the growth in the home finance market over the years, Parekh in his annual letter to shareholders of HDFC said: "As a basic tenet, construction finance entails higher risks and, therefore, such risks have to be built into the pricing.

"Construction finance should not, through any innovative structuring be available to developers at the rate of interest being offered on individual home loans. Further, complete up-fronting of construction finance to developers, even before the ground is broken is dangerous," he said.Parekh also said the country continues to face an acute housing shortage, but prices continue to remain high.

"Having spent so many years in this business, one recognises that one's voice can never be loud enough when so many vested interests exist as far as land markets are concerned.
 Nonetheless, I am of the firm belief that one must not give up or be beaten down to silence."At the cost of perhaps now sounding like a broken record, I continue to hold the stance that increasing supply is the only way home prices can come down in India. Even in Tier II and Tier III cities, home prices are inflated," he said.

Parekh, however, lauded the role of a new breed of entrepreneurs and first-time developers who have ventured into the affordable housing space.

"Such projects may be few and far between, but the trend is encouraging because this is where the real demand lies. Most of these affordable housing projects have been sold out immediately. Hopefully, the more established and larger developers will take a cue and focus on the affordable housing segment, rather than high-end luxury homes that they currently cater to," he said.


Go to Top

Photo Gallery
Fans holds an national soccer team jersey with the name and number of Lionel Messi...

Fans holds an national soccer team jersey with the name and number of Lionel Messi...

Virat Kohli interacts with children at the launch of Stepathlon Kids...

Virat Kohli interacts with children at the launch of Stepathlon Kids...

Pope Francis, left, and retired Pope Benedict XVI embrace during a ceremony...

Pope Francis, left, and retired Pope Benedict XVI embrace during a ceremony...

Horse-mounted Policemen seen at a road in Kolkata...

Horse-mounted Policemen seen at a road in Kolkata...

An egret takes off in New Delhi on Tuesday...

An egret takes off in New Delhi on Tuesday...

A typist attends a customer at a street flooded after heavy rains outside Court complex...

A typist attends a customer at a street flooded after heavy rains outside Court complex...

Muslims prays inside a mosque during the fasting month of Ramadan in Mumbai...

Muslims prays inside a mosque during the fasting month of Ramadan in Mumbai...

Army persons move towards the house where a Hizbul Mujahideen militant was hiding...

Army persons move towards the house where a Hizbul Mujahideen militant was hiding...

Bollywood actor Arjun Kapoor gestures at an awareness campaign for road safety....

Bollywood actor Arjun Kapoor gestures at an awareness campaign for road safety....

Delhi CM and AAP convener Arvind Kejriwal is welcomed by fishermen community...

Delhi CM and AAP convener Arvind Kejriwal is welcomed by fishermen community...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523