Genuine home buyers have moved away from the housing market due to higher prices and investors stayed away due to the weakening state of the economy, said Reserve Bank of India's (RBI) annual report 2014-15 released on Thursday.
The central bank's observations on housing market in its annual report follow RBI Governor Raghuram Rajan's reflections on the numerous unsold properties because of astronomical property prices and his urging property developers to reduce prices for the unsold properties to find takers.
"The demand for residential properties has slowed down in recent times and unsold stock of residential homes has increased considerably at the same time," the report said.
"As the economic growth has started to take-off, the overall buyer sentiment is expected to rise. Presumably, developers are counting on this to happen and hence holding the price," it added.
Rajan's comments had however drawn a response from a prominent Bengaluru realtor, who blamed the governments (both central and state) for the crisis of property prices.
At en event here last week, Prestige Group CMD Irfan Razack held that property prices will never fall because of the numerous taxes and guideline prices levied by government on new property development.
According to the RBI's annual report, quarterly growth in Housing Price Index (HPI) moved up in the first three quarters of 2014-15, as against a similar period in 2013-14, and there was a moderate pickup in house price growth, particularly in Delhi and Kolkata.