Housing sector may see some price correction: NHB

Housing finance firms' regulator NHB today said there may be "some price correction" in the housing segment as there is inventory build-up in some areas.

Written by Agencies | New Delhi | Published: October 12, 2012 6:13:01 pm

Housing finance firms’ regulator NHB today said there may be “some price correction” in the housing segment as there is inventory build-up in some areas.

“Such projects which are not selling on account of high price perception may see some price correction partly in the light of current downward revision in the housing loans,” National Housing Bank (NHB) Chairman and Managing Director R V Verma said after announcing 2011-12 results here.

Meanwhile,major lenders such as State Bank of India,Punjab National Bank,HDFC,ICICI Bank and Vijaya Bank have reduced home loan rates.

“There is a psychology of over supply which will play out during the year in the form of price correction and becoming more market oriented,” he said.

However,he said it would be difficult to say how much price correction could take place.

Talking about the annual number,Verma said NHB posted 39 per cent increase in net profit at Rs 387 crore for the financial year ended June 2012.

The net profit of the apex housing finance institution stood at Rs 279 crore in the previous fiscal.

The bank made a total loan disbursement of Rs 14,454 crore during the year against Rs 12,035 crore in the previous fiscal,an increase of 20 per cent.

However,sanctions shot up by 64 per cent at Rs 23,460 crore as compared to Rs 14,293 crore in 2010-11.

Interest income of the NHB improved by 27.9 per cent at Rs 2,478 crore as against Rs 1,938 crore in the previous fiscal.

Net interest margin (NIM) of the financial institution rose to 2.18 per cent at the end of June 2012 from 1.79 per cent at the end of Jun 2011.

Verma also said that measures are being taken to assess extent of project not completed and assess the reason for the delay.

Finance Minister P Chidambaram in his meeting with heads of public sector banks in August had pointed out that close to 5 lakh flats were lying vacant in Mumbai despite robust demand for housing.

Following this,Financial Services Secretary D K Mittal met bankers and the real estate developers body Confederation of Real Estate Developer’s Associations of India (CREDAI) earlier this month and discussed various issues affecting the

sector.

The NHB has been entrusted with the job of identifying viable projects across many cities and bring together a consortium of lenders to fund these projects.

Bank credit to commercial real estate has slowed significantly in the last one year. It contracted 1.8 per cent during April-July against 4.4 per cent growth in the same

period of previous year.

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