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Real estate boom in Asia will not last forever: IMF official
Our Bureau
New Delhi
June 1
The surge in real estate prices in Asia may not continue in the long run. The real estate demand in the continent has been spurred by a booming global economy, low interest rates, and the development of mortgage financing and this boom will not last forever, said Mr Joshua Felman, Senior Resident Representative of International Monetary Fund in Delhi.
While speaking at a meeting organised by industry chamber FICCI, Mr Felman said, "In the long run, housing supply can expand to meet the rise in demand. Over shorter periods, however, demand can spurt ahead of supply, sending prices soaring."
Mr Felman's statement comes close on the heels of Indian real estate companies' announcing multi-fold increase in both their toplines and bottomlines for the last fiscal.
Mr Felman said housing demand increases when incomes rise, since as people become richer they demand more and larger houses, the number of households increases, access to mortgages improves, and interest rates fall since affordability improves.
Even if housing prices are where they should be, given interest rates and expected income growth, this situation can change, he said. Interest rates today are at historically low levels and could rise again.
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