With the Reserve Bank effecting a 25-basis point increase in key rates, realtors on Friday said the cost of housing and housing loans was likely to go up by 15 to 20 pr cent on account of an expected rise in the developers' borrowing costs.

However, major realtors felt that this would not impact the demand for housing much especially during the festive season. Interest rates on home loans as well as on developers' borrowings were bound to go up. Housing prices, which had gone up by 15-20 per cent in the last one year, would further increase as we were not left with no choice but to pass on the same to buyers, Confederation of Real Estate Developers' Association of India (CREDAI) Chairman and leading realty developer company Parsavnath's Chairman Pradeep Jain said.

Asked about demand, Mr. Jain said there were no concerns, as buyers understood there was no benefit of putting their decision on hold due to rising property prices. “The housing prices will rise by 30-50 per cent, depending on the location, once the proposed Land Acquisition Act is passed by Parliament. So end-user customers know this and, therefore, we do not see any adverse impact on housing prices,'' he added.

Country's largest realty firm DLF Executive Director Rajeev Talwar said housing prices might go up as cost of financing the project would rise. On the demand side, he said, the prospective buyers would be discouraged to buy property with rising EMI on home loans.

CREDAI (NCR) President Pankaj Bajaj said the consecutive interest rate hikes had led to a 40-per cent rise in housing cost even for existing home buyers who had taken home loans.

He said consecutive interest rate hikes could hit housing demand. “Whatever robust demand for housing in India might be, a point has to come when interest rate hikes will start affecting it. We are afraid that point has come,'' Mr. Bajaj said.

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