The Reserve Bank of India (RBI) voiced its concern regarding spiraling housing prices. In its quarterly review it opined that this trend may also lead to an increase in general price levels thereby affecting financial stability. The bank said that during the successive quarters the housing sector witnessed a price rise that was sustained and rapid which if not addressed to could lead to demand pressures. The general price level will increase leading to financial instability. According to the central bank, the last quarterly results of 2009-10 showed a flat trend in housing prices.
In many cities housing prices lacked momentum. The reasons cited by the bank were stock market volatility and high valuations.
Giving further information about the gradual unfolding of this trend, the bank said that during the fourth quarter of 2009-10 housing prices increased by almost 27 percent in some major cities. However surprisingly housing prices in a metro like Mumbai increased only by one percent. Giving a detailed information about credit-off-take and outstanding housing loan, the bank said that advances in credit off-take increased by 9.6 per cent which has been calculated on a year-on-year basis.
On the other hand by the end of May 21 2010 outstanding housing loan stood at Rs 3,05,325 crore. In retail credit the figure stood at 52 percent.
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