Real Estate India

RBI governor says property rates not too high in India

Raghuram Rajan Reserve Bank of India (RBI) while announcing monetary policy review on Tuesday said that property prices in India are not too high, “Leave aside Aurangzeb Road and Malabar Hill from calculation,” he added.

“The value of real estate will increase in a growing economy, but the housing datasuggests that with 7-8 per cent inflation, prices are coming down in real terms because wages are going up,” he said.

Rajan further mentioned that, the central bank is not overly concerned with property prices even though the value of real estate appears to be increasing despite a sharp slowdown in the economy. According to him besides property prices of Aurangzeb Road and Malabar Hills property prices are not very high.

Aurangzeb Road, which is located in Lutyens Delhi, is home to several Indian billionaires like ArcelorMittal’s LN Mittal, DLF’s KP Singh and Max Healthcare’s Analjit Singh. Similarly, South Mumbai’s upscale Malabar Hill hosts several business tycoons and Bollywood superstars. Billionaire investor Rakesh Jhunjhunwala is known to have bought sea-facing apartments in Malabar Hill last year. Prices of apartments in Malabar Hill are as high as Rs.1.35 lakh per sq feet, making it one of the most expensive neighbourhoods to stay in the world.

In its monetary policy review RBI left interest rates unchanged citing high risk to its 2016 inflation target. By not cutting down its interest rates, it shows a sign to banks to continue with tight liquidity policy to contain retail inflation at around 6%. However, the real estate sector has been pushing for the rate cut so that buyers’ affordability to buy a house improves.



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