News: 'Indian housing demand to continue to be strong'

(BL 26/08/2006) New Delhi - Housing demand in the metros will continue to be strong over the next one year, especially among first-time home buyers, the Chairman and Managing Director of National Housing Bank (NHB), S. Sridhar, has said.

He, however, said that housing prices in the metro cities were likely to see `downward adjustments'.

"Home loan rates will mirror the general interest rates. The lending rate usually depends on domestic as well as international factors, such as oil prices. In the short term, home loan rates are expected to be stable," Sridhar told reporters after announcing the financial performance of NHB for the year ended June 30, 2006.

In tier-II cities, Sridhar said, demand for housing would be strong and prices of homes were likely to go up.

For the year ended June 30, 2006, NHB, which is the apex housing finance institution in the country, reported a net profit of Rs 87 crore, an increase of 98 per cent over the previous year. The loans and advances of NHB increased to Rs 16,268 crore, a growth of 30 per cent in 2005-06.

Disbursements of NHB in July-June 2005-06, however, declined to Rs 5,997 crore from a level of Rs 8,089 crore in the previous year.

Sridhar said NHB, over the next three years, hoped to catalyse institutional credit flow of Rs 75,000 crore for housing, i.e. additional 15 lakh houses of which NHB's own contribution is projected at Rs 22,800 crore.