The real estate sector has welcomed the Reserve Bank’s decision to keep repo rates unchanged at 6.5 percent. House prices have gone up in many cities over the past year, and the Reserve Bank’s decision will benefit home buyers at this juncture, it said. The Reserve Bank of India’s Monetary Policy Committee met on the 8th of this month and announced that it will maintain the repo rate at the current level of 6.5 percent. From May 2022 to April last year, the repo rate increased six times in a row. However, since then, it has been continuing without increasing it for a year. RBI Governor Shaktikants Das said that it has been decided to keep the repo rate as it is in the background of international economic uncertainty and factors such as the target of consumer price index-based retail inflation in the country to reach 4 percent as set by the government. Real estate experts are of the view that this decision will boost the residential housing sector. They are hopeful that the house sales will reach the 3 lakh mark this year. It is said that this will continue the momentum in housing sales. It is said that house prices have increased in seven major cities of the country in the last year, and the decision taken by the RBI will give impetus to the real estate sector. Here is what the experts in the real estate sector feel…
1) Shrinivas Rao, FRICS, CEO, Vestian:
“RBI maintained the status quo and kept the repo rate unchanged at 6.5% for the sixth time in a row. It is a welcome move to curb inflation and control liquidity in the market. Moreover, this stability in monetary policy, along with robust economic growth, may result in sustained demand for real estate assets. Headline inflation inched up marginally to 5.7% in December 2023 from 5.6% in the previous month. If inflation comes down under the RBI’s target limit, the second half of 2024 may witness rate cuts, further boosting housing demand.”
2) Mr. Mohit Jain, Managing Director, Krisumi Corporation
“By holding rates steady, the RBI prioritises inflation control within its target range. From a real estate sector perspective, a downward revision in rates would have been the best outcome, but the RBI’s decision to hold rates implies steady EMIs for borrowers. We expect continued momentum in sales across various property segments, including affordable, mid-range, and luxury housing, throughout various regions for the foreseeable future. A downward revision, which is expected later this year, would further propel the sector.”
3) Vimal Nadar, Senior Director, Research, Colliers India
“At 6.5%, the benchmark lending rate has remained stable for a year now. The commitment to growth while taming headline inflation remains unabated, while the economy is expected to close at a higher 7.3% for fiscal 2023–24. Stability not only provides continued relief to homebuyers in the form of predictable EMIs but also aids real estate developers in having greater confidence in near-term financing costs. The steadiness in the real estate ecosystem augurs well for healthier balance sheets and should provide further momentum to sales in the residential segment. Moreover, the recent focus of the interim budget on infrastructure and urban housing stands to benefit the real estate sector throughout 2024 and beyond. An anticipation of future repo rate cuts and a projected GDP growth rate of 7% for fiscal 2024–25 adds credence to the conviction of a strong performance by the real estate sector in the next few quarters.”
4) Mr. Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd.
“As expected, the RBI kept rates on hold. The prolonged pause, for the sixth time since February 2023, is aimed at keeping inflation in check without hurting economic growth momentum. A reduction in policy rates would have been the best scenario for interest-sensitive sectors like the real estate sector, but policy continuity is the next best outcome for both borrowers and developers alike. The decision allows homebuyers to make informed choices, which is expected to result in enhanced demand across all housing segments in line with the country’s overall economic progress.”
5) Mr. Amit Goyal, MD, India Sotheby’s International Realty
“The RBI’s decision to maintain policy rates at 6.5% was anticipated, given the global uncertainties, which are also highlighted by the governor, including ongoing conflicts and emerging flashpoints worldwide, with disruptions in the Red Sea being the latest example. However, the encouraging aspect is the remarkable performance of the Indian economy in recent years. Growth is accelerating, surpassing most forecasts, and inflation is on a downward trend. The projected real GDP growth for the next financial year stands at 7%, with risks evenly balanced. Headline inflation has moderated to 5.5%, which is positive news. If the current scenario persists, we may anticipate a rate cut at the next MPC meeting. Overall, the current situation bodes well for the real estate market, and we anticipate robust demand to continue, particularly in the luxury real estate segment.”
6) Mr. Prashant Rao, Managing Director, Poulomi Estates, a Hyderabad-based real estate developer
“Against the backdrop of global uncertainties, the RBI’s decision to maintain policy rates at 6.5% came as no surprise. However, the governor highlighted that India’s potential growth is currently underpinned by structural drivers such as improved physical infrastructure, the development of world-class digital and payment technologies, ease of doing business, increased labor force participation, and better quality of fiscal spending. Consequently, the projected real GDP growth for the next financial year stands at 7%, with risks evenly balanced, and headline inflation has moderated to 5.5%. These developments bring positive news for both the Indian economy and the real estate sector. With this, we anticipate rate cuts in the next MPC meeting, which will be advantageous for home buyers.”
7) Piyush Bothra, co-founder and CFO, Square Yards
“The RBI’s decision to keep the status quo for the sixth consecutive time is in line with expectations and is poised to bolster consumer confidence. This move is a big positive for the affordable and low-income housing segments, which are responsive to interest rate fluctuations. The decision also fosters confidence among homebuyers by providing stability in loan repayments, consequently stimulating overall consumer spending. With the real estate market currently experiencing a bullish trend, the RBI’s persistent repo rate stance is anticipated to amplify the momentum in the housing sector.”
