Realty reactor to impact housing finance companies
Curbing of speculative activities in the realty sector after the establishment of a regulator is expected to adversely impact the housing finance companies, a Reserve Bank report said.
“The push to regulate the realty sector is likely to have an impact on housing finance segments as it may help curb speculative activities significantly,” its Financial Stability Report said.
It, however, was quick to add that there are no concerns around “systemic risk” from this sector, despite a slight increase in the stressed advances in the retail housing sector in the recent quarters.
The Real Estate Regulatory Bill (RERA) was passed by both Houses of Parliament earlier this year and framing of draft rules for the same is underway at present.
Multiple reports following the November 8 demonetisation have also said that there may be adverse impact on the realty sector.
The resilient retail segment, especially the high-value housing loans, has seen a lot of focus by the lenders following a general slowdown in credit demand by corporates due to both cheaper alternatives in the money markets and sluggish economic growth.
The FSR said the all-India house price index posted an annual increase of 7.3 per cent as at the end of the first quarter of 2016-17, after moderating for four consecutive quarters.
Among other asset classes, the FSR said the NSE’s Nifty indice outperformed both the MSCI World and Emerging Market indices from the beginning of this financial year till November 2016.