Chanda Kochhar, who is set to become chief executive of the ICICI Bank said that corrections so far in prices are not sufficient and he also indicated that interest rates could fall further.
She denied that the bank has tightened credit so much that property related businesses are finding it hard to source funds for developments.
However developers across the country have cancelled or delayed projects because of lack of funding.
Now they are turning to affordable housing projects as the market has stalled for luxury villas and apartments.
Developers have asked both local and central governments to relax the home density rules. Current rules say that builders cannot construct houses for more than 400 people on a hectare of land. Developers want the number to be doubled.
'If accepted, this can lead to a 50% increase in the number of houses that can be built in any defined area of land,' said Unitech Managing Director Sanjay Chandra.
'We have asked all state governments and the central government to relax the density norms,' said Parsvnath Developers Chairman & Managing Director Pradip Jain.
India's biggest developers have confirmed their involvement in affordable projects. Unitech said 80% of its new projects will fall under this category, while DLF plans to test-launch affordable housing projects in at least six cities in the coming months.
Property prices in India have doubled since 2005 are now expected to return to their pre 2005 rates.
