RERA, GST pull home loan growth

Poor home buyer's sentiments despite a dip in the home loan interest rates have led to a sharp decline in home loan growth. According to the Centre for Monitoring Indian Economy (CMIE), home loan growth in April-October fell down by 32.7 percent from a year ago, one of the biggest declines in the last five years. In 2016, home loan growth was down 4.27 percent, while in 2015, it was up 26.89 percent. Over the past two years, the interest rate on home loans has come down by 150-200 basis points, said the report. A basis point is one-hundredth of a percentage point. Major financial institutions have lowered their interest rates. In early November, the announced its plans to  in margin cost based lending rate (MCLR rates). The country’s largest lender bought down the rate to 8.30 percent. Many developers believe that weak consumer sentiment stems from the impact of three major events or reforms made by the government to either improve India's economic growth, fight black money and or simplify tax. “Three events have slowed down the real estate market in the last one year. First, it was demonetisation, then because of RERA, new launches came down dramatically. Third, GST has increased the cost. All these have brought down the sentiment and as a result, sales have been slow," said Anuj Puri, chairman, Anarock Property Consultants, a real estate advisory firm. A slow implementation of the new Real Estate (Regulation and Development) Act 2016, which came into effect from May 1 this year, compiled with uncertainty over the impact of Good and Services Tax (GST) on home prices have pulled down consumer sentiment in the last one year, a real estate consultants and developers told the paper.