The year 2006 has ended. How will the housing sector perform in the year 2007? Will it continue the way as in the past or would it be different? As was evident during the year 2006, the interest rates kept climbing slowly and steadily and housing loan interest rates on the contrary kept falling down from 16-17 pct to 7-10 pct though they have now started moving up and are ruling at the double digit mark. Will the upward trend continue or will they stabilise at these levels. RBI itself increased its repo rates. 2005 saw a hardening of interest rates and 2006 saw a further hardening effect. There have been increases in the interest rates by banks and Housing Finance Companies (HFCs). The property prices have been rising in fact so much so, that properties are again becoming out of reach of the common man. Whether the price rise is justified or is it just a manipulated bubble remains to be seen. The RBI has cautioned the banks to be extra careful while going all out to fund and! finance the real estate sector. Further, substantial increases in 2007 may not be possible. As it is, with the present interest rates, only genuine buyers would remain in the market in the long run. The speculators and investors would have to exit. Why? Well because the property prices are so high that selling properties would be difficult. It would be difficult to buy at the present rates. As per the HDFC annual report, in many parts of the country, the housing demand is investment driven. Further, with increase in interest rates, the returns on this investment would fall. RBI on the other hand is trying its best to prevent increase in inflation. So the floating loan buyers need not despair. The hard times may be a temporary phase. And hopefully it should not harden any further. The Times Of India New Delhi Edition December 29s