by THO
As expected, the Reserve Bank of India on April 5 once again kept the repo rate unchanged at 6.5 per cent. The decision offers a sense of continuity and predictability to the real estate sector. Unchanged lending rates present EMI-dependent homebuyers and those waiting on the sidelines to fulfill their home-ownership aspirations, said real estate experts.
It is also expected to significantly boost overall market sentiment, pushing residential sales in the top seven markets of India to more than 3 lakh housing units in 2024, said experts.
“Aptly and as expected, the RBI has kept the repo rates unchanged at 6.5%. The decision to maintain the status quo will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence,” said Anuj Puri, Chairman – ANAROCK Group.
Provides much-needed relief to homebuyers in the face of rising housing costs
The average residential prices across these cities have seen a significant jump in the last one year – ranging between 10-32% in Q1 2024 when compared to Q1 2023. Thus, the breather which RBI’s unchanged repo rate will provide to home loan borrowers is apt and welcome, he added.
Manju Yagnik – vice chairperson of Nahar Group and senior vice president of NAREDCO, Maharashtra, said that the RBI’s decision offers homeowners a significant benefit and much-needed relief in the face of rising housing costs. This decision sets a base for the housing sector’s long-term stability and expansion and boosts the optimistic attitude currently permeating the market.
Builders welcome RBI’s decision to maintain status quo
The RBI has once again demonstrated great economic prudence and fiscal foresight by keeping the repo rate unchanged for the seventh consecutive time. “A stable and predicted repo rate lends credence and confidence to the average homebuyer who can be assured while taking home loans. This stability has a direct cascading effect on the growth of the real estate sector, which in turn contributes significantly towards India’s GDP and future growth prospects,” said Pradeep Aggarwal, Founder & Chairman Signature Global (India) Ltd.
“The central bank maintained the repo rate at 6.5% continuing its hawkish stance to keep inflation under check. However, with repo rates being an industry agnostic subject, we hope to see lower repo/interest rates later this year which will provide an impetus to not just real estate and housing demand but across industries – compounding sectoral and economic growth. Having grown 8.4% in Q3 of FY 2023/24, a rate cut in the future will help sustain this economic momentum or even accelerate it – and we expect to see repo rates being reduced in Q2 of the new FY in the post election phase,” said Boman Irani, president, Credai.
Also Read: Real estate sector welcomes RBI’s decision to keep repo rates unchanged at 6.5%
Reinforces investors’ confidence
The decision to uphold benchmark lending rates reinforces investors’ confidence.
For the real estate sector, the decision offers a sense of continuity and predictability. It also provides a solid foundation for future investment and development initiatives. “Developers and investors can capitalize on the conducive environment to explore new opportunities and drive innovation in the market. With anticipation of rate cuts in the ongoing fiscal year, the momentum in the residential segment is likely to persist,” said Vimal Nadar, Senior Director & Head, Research at Colliers India.
“The policy continuity fosters a predictable interest rate environment, which is crucial for both homebuyers and developers. We anticipate sustained demand, especially in the mid-tier and high-income segments,” said Samantak Das, Chief Economist and Head – Research and REIS, India, JLL.
The momentum is slated to continue with the current pause and potential rate cuts in H2 FY25 expected to support the growth cycle in the sector. This scenario would further incentivize buyers on the sidelines and is expected to significantly boost overall market sentiment, pushing residential sales in the top seven markets of India to another historic high of over 3,00,000 units in 2024, he said.
Also Read: RBI repo rate hold likely to boost homebuyers’ sentiment to invest in real estate
India’s residential markets are currently in the midst of a sustained bull run. Sales in the country rose to over 74,000 units in Q1 2024, up 9% from the quarterly run rate of 2023. If controlled inflation persists, the possibility of future rate cuts becomes more realistic. This would lead to increased affordability levels in 2024, which will be second only to 2021 peak affordability levels reported in JLL’s Home Purchase Affordability Index.
“This strong growth trajectory is expected to sustain adequate demand, particularly in the luxury segment of the real estate market,” said Ashwin Chadha, CEO, India Sotheby’s International Realty.
“This move towards maintaining stability in lending rates bodes well for the real estate sector, which has been consistently growing. It also provides added support to consumers, ensuring economic growth remains robust,” added Shishir Baijal, chairman and managing director, Knight Frank India.
