Bank lendings to realty would not decline, say experts

"Banks will continue to fund real estate projects. The RBI is concerned about transparency in the system. If good projects come up, banks will fund them. Availability of funds will not be a major cause of concern for the sector," consultancy firm Jones Lang LaSalle's Chief Executive Officer (Business), Sanjay Dutt, said during an event organised by Girem Corporate Capital here.

However, what would really impact the sector is time-consuming process of obtaining approvals of various regulators, and the inflation, which is leading to increase in input costs for the developers, he said.

"The real estate sector will continue to grow. But if the government speeds up its clearance procedures, the supply of housing stock will increase, bringing down property prices. The government and regulatory authorities need to realise that allowing quick permissions will act in favour of consumers."

A senior official from Axis Bank who did not wish to be named said, "Of our total lending last year, 3-4 per cent was towards real estate sector. We will continue to lend at same levels in the future. I don't think there will be any impact on lending by banks for the sector. Only the banks will now be more cautious."

HDFC Chairman Deepak Parekh has also said that there was no slack in demand for home loans as "there is shortage of houses and people want to buy a house".

"I think even if the interest rates go up by another 100 basis points, even then there would be demand; however if it goes up 400-500 points, who knows what will happen... But people won't stop purchasing a house because of half-a-percent hike in interest rates," Parekh said.