Property Prices Will Not Crash, Good Time To Buy: HDFC

It is a good time to buy property if you are going to live in it - this is the message from Renu Sud Karnad, managing director of HDFC Ltd, the biggest housing finance company in India. In conversation with NDTV Profit, she said that the interest of people to buy homes or locate a property "continues to be very good".

Here's an edited transcript of the interaction:

How long do you expect the sector to recover from denomination?

Honestly, it is very difficult to say. I think the positive of it is that...you know, we get calls of people for loans, we get calls every month, we get people coming to our site... Nothing has changed there. As far as the interest of people to buy homes or locate a property still continues to be very good. Yes, definitely for the time being, there is a lull.

You must always know that whenever there is a talk of property prices or interest rates coming down, every buyer waits. I don't think property prices are going to crash. At the high-end, yes, you might see some rationalisation. People are waiting for the interest rates to come down, but having said that, most of the loans today are on a variable rate basis. So, even if the rates do come down 2 or 3 months later, the customers get the benefit of it.

So, I think, it is a short-term phenomenon. Our need, our requirement, our (housing) shortage is so high that I don't think people will wait more than 3-4 months before they start coming back to it.

If the RBI cuts interest rate, will banks pass on the benefit to customers?

I can talk about HDFC and I can say is that we have in the past - always whenever it was possible - passed any benefit that we were getting through interest rate rationalisation to the customer and we would certainly do that. It's really dependent on your cost of funds. As the cost of funds comes down, we are able to pass it on and I think we will certainly continue to do that.

What is your message to home buyers who are uncertain after demonetisation?

If you are going to live in a property, I think there is no time better than today. I think if you look at India's population...if you look at the rate at which urbanisation is happening, if you are going to be a real user of the property, I don't think you should ever put back your decision by years... a couple of months maybe, but certainly not by years. And I'm very convinced that the middle income India and the low income India has a long way to go, and the sooner you buy the property the sooner you save your rent the better.