New Delhi: The Government on Tuesday indicated it intended to curb demand in the “overheated” housing and real estate sectors.
"Intention is to constraint demand in those sectors where there are signs of what you call overheating and example of that could be real estate and housing. I think in these sectors there is reduction in demand," Finance Minister P Chidambaram told reporters.
India’s industrial output increased 13.6 percent in April compared to 9.9 percent in the same month last year, but the Government is concerned that the economy might be overheating.
The Associated Press reports Chidambaram has warned banks against too much lending in real estate, which experts believe is drawing large amounts of speculative money that could result in a property bubble.
Chidambaram, however, said he had no intention of reducing demand in other sectors. The impact of his statement was immediate on Dalal Street, where nearly all the real estate stocks lost value, notwithstanding a modest 48-point gain in the benchmark index.
All realty stocks gained on Monday when the DLF IPO opened for subscription on a strong note. Unitech, the biggest listed real estate firm, saw its shares plummeting by 3.4 per cent or Rs 17.45 to Rs 490.
Another leading realty developer Parsvnath dropped 1.73 per cent to Rs 312.35 on the Bombay Stock Exchange, while stocks like Ansal Properties, D S Kulkarni, Sobha Developers and Atlanta Ltd also fell sharply.
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