This is the lowest new apartments will cost, despite RBI’s demand for further lowering of prices

On Monday, RBI Governor Raghuram Rajan had asked builders to cut home prices so that housing demand can be stimulated, to which the realtors has said that there is no scope for any further price cuts.

"Over 90% of the real estate supply in the country is now in a very affordable band and has already corrected. In some places prices have come down 25-30%. There is no further scope for any cuts," said Getamber Anand, national president of the Confederation of Real Estate Developers' Associations of India.

He added that any further cuts will produce NPAs (non-performing assets), which would mean that many developers would not be able to deliver their projects.

India's housing market has been through one of its worst times in the past two years, because of a fall in apartment sales, and an unexpected rise in unsold apartment inventory levels.

Also read: Commercial real estate on a rise in India, upped 8% from last year

Talking of RBI, it has cut rates by 1.5% since January 2015, with the key policy rate being cut by 0.25% and brought down to 6.5%, the lowest in more than five years. This led Rajan to say that prices would be adjusted. "I am hopeful that as interest rates come down, there will be more credit and buying. And I am also hopeful that prices adjust in a way that encourages people to buy," Rajan had said on Monday in the YB Chavan Memorial Lecture in Mumbai.

Dharmesh Jain, president of developers' body MCHI-CREDAI, told ET that builders will be more than happy to rationalise prices and get more business, but a look at the economics of it including land cost, input cost and taxes, leaves them with less scope. A few more reasons for no further fall in real estate prices are land cost, decided by the government, increasing labour costs and a massive shortage of skilled labour.

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