India's liquidity-starved economy will restrain housing market activity and price rises in coming months and into 2020, according to a Reuters poll of property market experts who were skeptical aggressive interest rate cuts will revive it.
House prices are expected to rise just 1% on average this year and 2% in 2020, the lowest median predictions since polling began for the two years, and well below the current 3.15% rate of consumer price inflation.
A majority of respondents in the Aug. 13-27 survey said risks to those already-modest predictions were skewed more to the downside.
That comes despite the Reserve Bank of India having slashed its repo rate by 110 basis points so far this year, to 5.40%. It is also expected to cut it further to 5.15% over the coming months to revive a slowing economy.
However, much of that easing has not reached borrowers as banking and non-banking financial companies (NBFCs) are still grappling with very large bad loans on their balance sheets, which has led to a liquidity crunch.
The government's own assessment is that the lack of available credit is the worst in over 70 years.