The Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5% for the tenth consecutive time, aiming to balance inflation management with economic growth. This stability is seen as a crucial factor for the housing market as the festive season approaches.
Anuj Puri, Chairman of ANAROCK Group, highlighted that the fundamentals of the Indian economy remain strong despite global challenges. He noted that while a rate cut would have been ideal, the RBI’s cautious stance is understandable given various macroeconomic factors. The unchanged repo rate is expected to help maintain momentum in the housing market during the festive season, especially amid rising housing prices and declining sales.
In Q3 2024, average housing prices in the top seven cities surged by 23%, reaching approximately INR 8,390 per sq. ft., up from INR 6,800 per sq. ft. a year earlier. Despite this price increase, residential sales fell by 11% compared to Q3 2023, and new property launches decreased by 19%.
The consistent home loan rates provide essential support for demand during the festive quarter, with expectations for faster sales momentum in Q4 2024. Last year’s festive quarter saw over 1.27 lakh units sold across the top seven cities, and the current stability in interest rates is anticipated to encourage similar or even higher demand this year.
Dharmendra Raichura, Vice President and Head of Finance at Ashar Group, emphasized that the RBI’s stable approach promotes overall economic stability while keeping inflation in check. The RBI has maintained its inflation forecast at 4.5% for FY2025, alongside a solid GDP growth projection of 7.2%. This steady rate is expected to foster a favorable environment for sustainable growth in the real estate sector.
The Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO Maharashtra Manju Yagnik, stated that the decision to keep the repo rate steady is a positive step for the real estate sector amid ongoing global economic uncertainties. This consistency is particularly important as the festive season, a peak time for home purchases, approaches. By maintaining manageable EMIs, potential homebuyers are encouraged to invest, particularly in the affordable housing segment. Furthermore, this stability benefits developers by improving cash flow and reducing borrowing costs for ongoing projects, ultimately supporting the growth trajectory of India’s housing market.
Also Read: RBI’s Upcoming Monetary Policy Announcement: Implications for the Housing Market
Here’s more comments from the industry.
“RBI’s decision to maintain the policy rate at 6.5% while shifting its stance to ‘neutral’ is a balanced approach that takes into account the current macroeconomic conditions and future outlook. This shift provides much-needed flexibility, allowing the RBI to respond swiftly to evolving inflation trends. For the real estate sector, this decision is particularly important as it signals a steady interest rate environment, which can help sustain the ongoing demand for home loans. A continued focus on stability in the financial ecosystem, along with a projected GDP growth of 7.2% for FY25, provides a positive outlook for the real estate sector.” — Prashant Sharma, President, NAREDCO Maharashtra
“The RBI’s decision to maintain the key policy rates reflects an assessment of the current macroeconomic conditions and future outlook. The continuation of the current policy rate at 6.5% ensures stability, while the potential for rate adjustments based on future inflationary data is a positive signal for the real estate sector.” — Deepak Nair, COO & Co-Founder, The Mentors Real Estate Advisory Pvt. Ltd.
“The RBI’s decision to maintain the policy rate at 6.5% is a strategic move that signals the central bank’s readiness to navigate changing economic conditions. This stable interest rate environment should bolster market confidence, allowing developers and homebuyers to plan with more certainty.” — Anil Mutha, Chief Visionary & Co-Founder, Nandivardhan Group
“The RBI’s decision to maintain the policy rate at 6.5% reflects a nuanced understanding of the current economic scenario. A stable policy rate ensures a favorable lending environment, supporting homebuyers’ sentiment.” — Shraddha Kedia-Agarwal, Director, Transcon Developers
“The real estate market has demonstrated strong performance, fueled by rising demand for homeownership and increasing income levels. We are optimistic about a surge in demand in the coming months.” — Samyak Jain, Director, Siddha Group
“The RBI’s decision to maintain the repo rate at 6.5% helps balance inflation with support for growth. It enhances consumer confidence and encourages investment in property.” — Rohan Khatau, Director, CCI Projects
“RBI’s decision to maintain the policy rate at 6.5% marks a strategic move to balance growth and inflation dynamics. A stable interest rate environment is vital for sustained momentum in housing demand.” — Govind Krishnan Muthukumar, Co-founder & Director, Tridhaatu Realty
“RBI’s decision to maintain the repo rate at 6.5% emphasizes its role in controlling inflation and sustaining economic growth. This will further motivate potential buyers to pursue homeownership.” — Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited
“The RBI’s decision to hold the repo rate brings cheer among homebuyers, as the relatively affordable home loan interest rate regime will continue during the festive season.” — Rajiv Agrawal, Co-Founder, Saarathi Realtors
