More than 80 per cent of India borrows home loans that are below Rs 20 lakh and it is this segment in the Tier II and Tier III cities that stands to gain after today’s interest rate cut by state-owned banks. Prospective buyers in metros will have to wait for banks to cut rates across the board or for property prices to plunge.

Public sector real estate company National Buildings Construction Corporation Limited (NBCC) CMD Arup Roy Choudhury said, “The question to be asked now is whether the builder is ready to provide housing in this category.” He rules out the possibility of being able to provide affordable housing beginning at Rs 5 lakh stating sky rocketing land prices in metros and their suburbs.

“Rs 5 lakh is nothing. Even in Tier II cities, land prices have shot up in the last two years,” Chowdhury said. NBCC is trying to build affordable housing in the range of Rs 20 lakh to Rs 40 lakh in Delhi NCR region, Kolkata, Vizag and Kochi, he said.

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