The best vision is insight.
Fearing that there may be a bubble in the real-estate prices, RBI has made it increasingly difficult for the builders to access bank finance. Also, the interest rates on their borrowings have gone-up. The idea is to cool down the speculation in the real-estate sector. RBI is trying to contain the snake which could sting if left out in open.
It’s a situation wherein banks and financing institutions start over-lending arbitrarily to real estate developers ensuing a likely oversupply, or households buying more home than is necessary owing to low interest rates, or even investors going for real estate not due to having confidence in the market but the tax SOP’s. What it means is that, the diverse financial products are not able to be of much help if and when real estate markets dive or show volatility. Some instances show, such financial products and mechanisms may become a Catch-22 as they increase the return when times are good, but turn upside down when times are bad.
Therefore, there is a general expectation that the prices may correct or at most remain stable in the near future. If that is so, it may be prudent to wait and watch the scenario. Moreover, the second house is an investment, and not a necessity. The objective here is capital appreciation rather than a need for a shelter.
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