The Effect of Inflation on Housing Prices
The Effect of Inflation on Housing Prices Everyone knows that inflation is one of the greatest factors that is affecting majority if the purchases. But it as fact that price of all commodities is not influenced uniformly. Practically, there is no direct link between real estate prices and inflation. It, however, is one of the primary factors that lay a vital role in influencing the rates of properties. When inflation is high in the market, RBI may refrain or increase from decreasing the repo rate which is rate through which money is lends to the banks. This makes higher credit cost. Thus, the home loan interest rates are expected to remain high. Generally, people become unfavorable to any kind of debt which includes applying for home loan when the interest rate rises. This could result in deduction in rates due to the fear of developers to severe business slowdown. Eventually, this may induce property developers to cut down on the cost or bring in some innovative pricing