Residential property sales drop due to rising rates: CBRE

Sales volume of residential properties in major cities have dropped by 10-15% due to rising home loan rates, property consulting firm CB Richard Ellis (CBRE) said today. However, there has not been any drop in sale price of properties in big cities as developers are holding onto the current rates, it said.

"Sales volume of residential apartments have come down especially in Mumbai and Delhi in the range of 10-15% mainly because of rising interest rates," CBRE, Chairman and Managing Director (South Asia), Anshuman Magazine told reporters here today.

With interest rates constantly moving up, Magazine said prices of residential properties would get impacted if the sales continue to go down. "Developers are holding onto the prices but essentially prices can get impacted when sales do not happen," he said.

He pointed out rising lending rates has turned out be a major challenge for the real estate industry, which has gone up significantly high. Lending rates have gone up by over 2% in the last one year because of tightening of monetary policy by RBI to tame spiraling inflation.

As developers facing difficulty in getting credit for their projects, Magazine said that liquidity crunch would impact the supply of accommodations throughout the country.

"Developers are facing liquidity crunch. If liquidity does not improve, development of projects will not take place and supply of properties does not improve, prices will not come down which is a very complicated circle," he said.