Home prices in India are highly inflated, according to Deepak Parekh, chairman of the country’s largest housing finance company, HDFC.
"At the cost of perhaps now sounding like a broken record, I continue to hold the stance that increasing supply is the only way home prices can come down in India. Even in tier-II and tier-III cities, home prices are inflated," Parekh said.
Parekh urged home buyers to be cautious of 'too-good-to-be-true' offers from the property developers and warned them against schemes where builders claim of paying interest on the borrowers' loans.
Parekh also asked financing companies to stay away from innovative and aggressive loans, including teaser rates where the interest rates rise gradually and lending money to developers at the same rate as being offered on individual home loans.
Parekh, however, lauded the role of a new breed of entrepreneurs and first-time developers who have ventured into the affordable housing space.
"Such projects may be few and far between, but the trend is encouraging because this is where the real demand lies. Hopefully, the more established and larger developers will take a cue and focus on the affordable housing segment, rather than high-end luxury homes that they currently cater to," he said.