Renu Sud Karnad, joint managing director of HDFC [Get Quote], the country's largest mortgage player, said she saw 'increased interest' from first-time house buyers, courtesy the correction in property prices, interest rate cuts and developers introducing affordable housing by resizing the offered areas.

Property developers agree.

Consider this:

• HDIL Ltd launched a housing project at Kurla, a central suburb of Mumbai, in February, at a price 30 per cent lower than market rates. More than half its sales came from first-time home buyers. Of the 756 units on offer, the developer has already sold 575.
• About 85 per cent of the 500 flats at DLF Westend Heights in Bangalore have already been sold. The project was aimed at information technology professionals and the flats were priced 24 per cent less than market rates. DLF says about 60 per cent of the buyers are first-time house owners.
• Unitech, which launched Uniworld Gardens�II at Sohna Road, Gurgaon, and cut prices by more than 20 per cent, has sold more than half the flats. It now plans to launch affordable housing projects in the Rs 500,000 to Rs 10 lakhs (Rs 1 million) range in Chennai, Kolkata and other cities.

Bankers also see a sharp rise in enquiries from first-time buyers, after an 18-month hiatus. Bank of India [Get Quote] Executive Director M Narendra said many first-time buyers were coming to the bank for loans as the availability of affordable projects had increased.

Cuts in interest rates and property prices have improved affordability. First-time buyers have been a huge beneficiary of the former. Every 0.5 per cent increase in the interest rate reduces home loan eligibility by about 7 per cent, shows a study by Liases Foras, a real estate rating & research agency.

Liases said real estate would attain the 2005 efficiency if home loan rates came down to 7.5 per cent and property prices fall by 5 per cent. The risk spread in the real estate sector would then be negligible.

First-time home buyers have stayed away from the market ever since developers, in a bid to cash in on the market sentiment, focused on launching luxurious projects, bigger in size and priced beyond the reach of average buyers.

Property prices across India more than tripled from 2003-07, because of rising incomes, mortgage availability at inexpensive rates, higher tax benefits and speculators flocking to the market.

As a result, inventory levels of property jumped to 40 months of equivalent sales, compared with eight months or lower a few years ago, said Pankaj Kapoor, CEO of Liases Foras.

However, some analysts and experts said it might be difficult to sustain the momentum as several genuine buyers were expecting a further drop in prices and uncertainty in the job market might make matters worse.