Builders see short-term impact on housing sales on possible hike in home loan rates
New Delhi:
According to real estate developers and consultants, the RBI’s decision to hike the repo rate may impact housing sales, especially in the affordable and middle-income group.
He said the RBI’s decision to raise the benchmark lending rate by 50 basis points to 5.40 per cent would make home loans costlier and thus reduce the affordability of potential homebuyers.
However, industry experts believe that the impact on sales will be short-lived as the housing market fundamentals remain strong. Some developers are of the view that home loan rates are in the comfortable zone and expect housing demand to continue during the festive season.
On the policy, Harshvardhan Patodia, president of realtors’ body CREDAI, said: “…we expect the repo rate hike to hamper sales in the sector, but considering the positive sentiment from home buyers, the impact may not be long-lasting. Could stay.” This is the third consecutive increase after the increase of 40 basis points and 50 basis points in May and June respectively. Overall, the RBI has increased the benchmark lending rate by 1.40 per cent from May this year.
Niranjan Hiranandani, Vice Chairman, NAREDCO and MD, Hiranandani Group, said, “As home loan lending is at a flexible rate, the short term interest rate spike will certainly hurt homebuyers sentiments, but it will averaging costs positively over the long term. House of Hiranandani CMD Surendra Hiranandani said the hike in repo rates will impact the interest rates and the attitude of homebuyers.
Shriram Properties CMD M Murali said minor changes would have minimal impact on buying decisions. “We believe that the positive sentiment will continue given the current strong demand”.
Atul Goel, CFO, Brigade Enterprises also said that it will have a marginal impact on the real estate sector.
“While this will mean an increase in interest rates for housing loans, the demand that the sector is currently witnessing is expected to remain the same. The pandemic has affected a paradigm shift in those who want to rent them out. instead of wanting to own a house,” he said.
Abhishek Kapoor, CEO, Purvankar Limited said that home loan interest rates are likely to increase. “However, against the backdrop of rising income and employment levels and enthusiastic customer sentiment, this increase in rates is unlikely to impact residential sales”.
CREDAI NCR President Manoj Gaur said there will not be “much impact” on consumer sentiment, which is currently upbeat.
Anuj Puri, chairman, real estate consultant Anarock, said a hike of 50 basis points is definitely high, and home loan lending rates will now move further in the red zone.
He said it finally marks the end of the all-time best low-interest-rates regime, one of the key factors that has fueled housing sales across the country since the pandemic.
“This crisis coincides with the inflationary trend of primary raw materials, including cement, steel and labour, which has led to an increase in property prices in the recent past. Together, these factors – rising home loan rates and construction costs – increase residential sales. which did reasonably well in the first half of 2022,” Puri said.
Knight Frank India CMD Shishir Baijal said a third hike in rates would mean a fall in affordability and could affect the sentiments of home buyers.
He said, “With the cumulative rate hike till date, assuming full transmission, the capacity of a potential home buyer reduces by about 11 per cent, i.e., the ability to buy a home worth Rs 1 crore now comes down to Rs 89 lakh. “
According to Knight Frank India, housing sales grew 60 per cent year-on-year at 1,58,705 units in eight major cities in January-June this year, the highest semi-annual demand in nine years, mainly due to lower base effect as well as mortgage rates. Inspired by. ,
Anshuman Patrika, President and CEO – India, South-East Asia, Middle East and Africa, CBRE, said the RBI’s decision may impact the cost of capital, “though the immediate impact on housing demand is not certain.” “There has been an increase in home ownership appetite following the pandemic, and with the upcoming festive season, it may face a generally modest change in loan rates,” the magazine said.
AIPL’s group executive director Pankaj Pal said lending and deposit rates are likely to firm up. “It may have a slight impact, but we don’t see a major impact on the demand side in the housing market.” Rohan Pawar, CEO of Pinnacle Group, said the upward revision will impact homebuyers sentiments, which remain positive despite the last set of revisions, which have led to an increase in home loan interest rates.
Kaushal Aggarwal, chairman, The Guardians Real Estate Advisory, said that this move by the RBI to hike the repo rate again may temporarily limit the growth momentum of the real estate sector.