Last week I remained loaded with queries regarding the unstable political scenario, mounting inflation, slowing down economy and the future of Indian immovable property market. Believe me, the present downturn in real estate property sector is a temporary blip and the sector is destined revive as soon as inflation is controlled and interest rates move down. The persistence of inflationary forces in the market definitely affect the recovery in the real estate property sector.

RBI is on the path to further take harsh measures to push the interest rates up on July 29 when it review its annual credit policy. Because of the apex bank’s monetary measures taken so far to contain inflation, the interest rates on home loan segment have gone up by 2 percentage points. The cost of construction is also on the increasing path due to manifold jump in the prices of raw materials like steel, cement and bricks. As the land cost and cost of construction have increased significantly, builders and developers find it difficult to cut the prices on the finished products to absorb the rise in EMI due to increase in the interest rates on home loans.

But it is not the end of the story. As demand for the commercial property continues to be good, the requirement for residential units will also be felt soon. When the interest rates goes further up from here, the investors will feel the pinch. If the apex bank cuts the rate, the whole scenario will be under grip. Even if there is no change in the interest rate positive happenings will be there. When the EMI goes further up, the huge would like to exit from their investments in real estate sector. This will increase the supply of the residential units in return but putting downward pressure on their prices. And ultimately the winner will be the immovable property segment.