RBI has kept the repo rate unchanged and here is what the Real Estate Industry has got to say on this.
Dr Niranjan Hiranandani, MD, Hiranandani Group
The status quo in repo rate by RBI is governed by a mix of global and domestic factors reflecting better anchoring of inflation and nimble liquidity management. With an outpaced GDP growth and a downward inflation curve trajectory, India’s economic performance is noteworthy despite geo-economic shocks. Development of infrastructure, increased labour employment, enhanced fiscal expenditures, improved governance, and regulations along with structural policy reforms reflect the RBI’s multifaceted approach to strengthening India’s financial stability. RBI indicates emphasises the need to consider macro-economic broad risk factors while keeping customer-centricity in mind while deploying effective monetary policy. Hence, retaining an accommodative stance even under the benign geo-political mood is a step in the right direction. The uptick in new project launches, fresh supply of housing units, soaring sales in luxury housing, record high property registrations, and an average price appreciation of 7% demonstrates the strong real estate market performance index in the backdrop of a conducive market scenario. An increase in government capital expenditures towards building physical infrastructure and fuelling liquidity management will continue to boost construction activities. This will increase employment, growth in GDP, housing demand, and economic stimulation. Industry highly recommends differential policy treatment to combat negative growth in the affordable housing segment. A calibrated approach including fiscal intervention, tax exemption or cross-subsidization is necessary to restore growth in affordable housing.
Anuj Puri, Chairman – ANAROCK Group
With the fundamentals of the Indian economy remaining strong despite all global headwinds and inflation well under control, the RBI once again decided to keep the repo rates unchanged at 6.5%, thus extending the festive bonanza that it gave to the homebuyers in its last two policy announcements. Thus, homebuyers retain their advantage of relatively affordable home loan interest rates.
If we consider the present trends, the housing market has been unstoppable, and unchanged home loan rates will help maintain the overall positive consumer sentiments. Given that housing prices have risen across the top 7 cities in the last one year, this breather by the RBI is a distinct advantage to homebuyers. Going forward, we can expect the momentum in housing sales to continue, significantly aided by the unchanged repo rates which will keep home loan interest rates attractive and also signal ongoing robustness of India’s positive economic outlook.
Ayushi Ashar – Director at Ashar Group & Member of Managing Committee of MCHI-CREDAI
The consistent maintenance of the repo rate at 6.5% for the sixth consecutive time reflects the central bank’s commitment to achieving the 4% Consumer Price Index (CPI) target. This stability in monetary policy is crucial for fostering economic predictability and sustaining investor confidence. An unchanged rate may seem static, signals a strategic approach to balance inflation control with economic growth. As a real estate developer, we acknowledge the importance of a steady interest rate environment, as it influences borrowing costs and subsequently impacts the property market. The resilience in the repo rate provides a conducive atmosphere for sustainable development.
Keval Valambhia COO CREDAI MCHI
Ensuring stability in interest rates holds profound implications for both the residential and commercial real estate domains. Keeping the Repo rates low will foster an environment of financial accessibility through consistently low borrowing costs. Stable interest rates serve as a pivotal catalyst for driving heightened interest and investment in properties across both sectors. This, in effect, generates a ripple effect of increased demand, thereby injecting vitality into the real estate industry and also to economy at large. Amidst the intricacies of economic fluctuations and market uncertainties, the imperative of prioritizing affordable housing cannot be overstated.
Anshul Jain, Managing Director, India & Southeast Asia and Head of APAC Tenant Representation, Cushman & Wakefield
The update is in line with the last policy statement from RBI where the expectation was for the benchmark repo rate to stay unchanged at 6.5% and to have the target inflation rate of 4%, down from the current average of around 5.5%. For the Indian Real estate space, we do not expect the today’s update to have any material impact on the on-going positive sentiment. However, we hope the interest rates start to drop soon as this will also revive sentiments of affordable homebuyers.
Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra
The RBI has maintained the 6.5% repo rate, as expected. Nonetheless, considering that the macroeconomic conditions are favourable and the rate has been held at 6.5% for the past few quarters, the Indian real estate market and the overall economy would have benefited immensely from a rate reduction. This action will keep consumer housing costs and mortgage rates higher, and we hope it won’t negatively affect the feelings of prospective homeowners.
Dr. Samantak Das, Chief Economist and Head- Research & REIS, India, JLL
India’s economy, driven by accelerating growth indicators and softening inflation has provided comfortable legroom to the RBI to keep repo rate unchanged at 6.5% for the sixth consecutive time. Despite continued global uncertainties, India’s GDP growth has been strong due to robust domestic demand due to structural drivers of infrastructure and digital transformation of the economy. India’s residential markets in 2023 hit a historic peak, buoyed by positive buyer sentiment and still-healthy affordability levels. 2023 sales were in fact 25% higher than the previous highs seen in 2010. At the prevailing interest rates, we expect the residential sales market to clock a 15-18% y-o-y growth in 2024 too keeping the current momentum intact. Given India’s growth projections, we are hopeful that a future repo rate cut would give a massive fillip to affordability in 2024, which will be second only to 2021 peak affordability levels reported in JLL’s Home Purchase Affordability Index. This is likely to push India’s residential sales in value terms to over INR 3 lakh crore over the next year with the potential to double over the next five years, supported by the policy ecosystem and a pragmatic interest rate regime.
Vihang Sarnaik, Director, Vihang Group
We’re pleased with the RBI’s decision to maintain the status quo on REPO, especially given the ongoing inflation above the 4 per cent target. It aligns with market expectations, indicating a sense of stability in the current monetary policy. As a leading developer catering the middle-class housing aspirations, this will keep the housing demand intact. The decision to keep the repo rate intact will help developers like us who catering the middle-class aspiration of owning a home. It will help to continue the current momentum in real estate sales as even a 0.25 BPS increase would have impacted the home-buying sentiments in this segment.
Nikunj Sanghavi, Managing Director – Veena Developers, Treasurer – CREDAI MCHI
The decision to uphold the current repo rate is a welcome move in the face of a challenging economic environment world wide, showcasing a judicious approach to balancing diverse sectoral needs, including real estate. Recognizing the intricate dynamics in transmitting repo rate adjustments to lending rates, this decision provides a glimmer of positivity that holds the potential to invigorate buyer sentiments. Nevertheless, as an industry, we maintain vigilance, considering the cumulative impact of recent rate hikes on demand, especially in the affordable and middle-income segments. Emphasizing the broader economic interest and the housing industry’s well-being, we advocate for a future reduction in the repo rate by the RBI.
Also Read: Housing sales momentum to continue as RBI holds repo rate
