People who want to buy a house will not have to worry anymore.
Real estate sector experts have welcomed the RBI’s decision to keep the repo rate constant. They consider it relevant to the current scenario.
Boman Irani, President-elect, CREDAI National says, “We appreciate RBI for keeping the repo rate in check. This is a move that goes a long way in maintaining the sales momentum that we have seen in the residential segment. We at CREDAI welcome the decision of the central bank, considering the potential adverse impact of the increase in the repo rate and its impact on both housing demand and supply. The move will give a further boost to the affordable and middle-income housing segments in particular. With the central government also increasing its outlay for the PMAY program during this year’s budget, we expect the demand for affordable housing to pick up in the coming quarters.
According to Anshuman Patrika, President & CEO – India CBRE, the RBI’s decision to keep the repo rate steady is a surprise move with a view to withdrawing the accommodation while keeping a close watch on inflation. The move is highly encouraging for the infrastructure, housing and other real estate segments as the decision allays fears of further increase in financial burden on developers and borrowers, for now. With borrowing costs expected to remain largely stable, the overall growth momentum will get a fresh fillip. The RBI has taken a very balanced approach in the last one year to contain inflation and manage external volatility.
Piyush Gupta, MD, Capital Markets & Investment Services, Colliers India, says that after six consecutive hikes, the decision by the RBI MPC to hold off on further rate hikes is a welcome move. With inflationary pressures now easing, this will bring the focus back on demand for growth, credit off-take, consumer spending, real estate, infrastructure and especially the housing sector.
According to Vimal Nadar, Head, Research, Colliers India, the RBI’s decision is an encouraging sign. Homebuyers are likely to get some respite from the unchanged repo rate as the RBI has increased the repo rate by a cumulative 250 basis points from May 2022, taking the interest rates for homebuyers to 9.5% and above. Given the expected modest rise in income levels coupled with strong prices in a cautious economic environment, the RBI freeze on the repo rate is a much-needed step to boost real estate sentiment.
Says Amit Goyal, CEO of India Sotheby’s International Realty RBI’s decision to maintain status quo on policy rates is good news for home buyers, despite inflationary pressures and other geopolitical issues. Rising home loan interest rates have become a growing concern for both homebuyers and supply-side stakeholders. To some extent, higher home loan interest rates have dampened the demand for affordable and mid-range housing as buyers in these segments are more price-sensitive. While the luxury and high-end segments are yet to be affected significantly, going forward the overall industry could be affected.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, says that this is a welcome move by the RBI. Consumer inflation remained above the RBI’s upper limit of 6% following the recent crude production cuts by OPEC countries and Russia and is likely to remain stable over the next few months. Consumer inflation arising from such events is beyond the control of the central bank. Any increase in the repo rate and lending rates along with continued inflation can potentially reduce the spending capacity of consumers which in turn can reduce India’s economic growth. Therefore, the decision by the RBI to pause its rate hike cycle is supportive of economic growth. India’s economy is expected to grow at 6.5% in FY24; Which is an optimistic outlook for the economy amid ongoing volatility in global financial markets and concerns of an economic slowdown.
From the real estate market perspective, the sector has witnessed a rise in multiple home loan interest rates from a low of 6.5% to 8.75%, supported by affordable home affordability and strong desire for home ownership. Therefore, holding on to any further increase in lending rates should support the current growth momentum in the housing sector.