The Nifty Realty Index was trading with gains, outpacing several other sectoral indices on the NSE. The uptick follows a stable market opening and optimistic sentiment across midcap and sectoral baskets.

 Top Realty Gainers (Morning Trade)

Source: Exchange data

Market participants attributed the sector’s momentum to strong demand trends in the luxury and upper mid-income housing segments, along with expectations of a supportive monetary policy stance in the upcoming review.

 Luxury Housing Demand Anchors Sentiment

Brokerages remain bullish on the real estate cycle, particularly driven by robust sales in the luxury housing segment. According to Elara Securities, luxury demand has emerged as a structural driver, anchoring momentum in the residential real estate market across India. Analysts believe this trend is likely to continue through FY26, boosting developers’ toplines and sector valuations.

“The luxury segment is no longer a niche play — it’s driving volumes and margins for listed developers. With limited inventory and rising premium launches, the pricing power is shifting back to builders,” said an Elara Securities note.

 Policy Signals & Capital Flows in Focus

Investors are also closely watching the monetary policy stance, with hopes that any indication of rate cuts or liquidity measures could further support real estate stocks, which are sensitive to interest rate movements.

In parallel, institutional capital continues to find its way into the sector. EAAA India Alternatives recently announced plans to quadruple its real estate asset portfolio, reflecting growing investor confidence in India’s property market fundamentals.

Additionally, Runwal Realty’s ₹2,000-crore IPO is expected to hit the market soon, potentially drawing fresh capital inflows and increasing public participation in real estate equities.

 Outlook

With festive season sales expected to pick up momentum, analysts expect the realty index to stay in focus over the coming weeks. Key triggers to watch will include policy announcements, Q2 earnings from major developers, and progress on upcoming listings.

While valuations remain elevated compared to long-term averages, many brokerages continue to recommend selective accumulation in quality realty names with strong balance sheets and robust pre-sales pipelines.

Also Read: Qubit’s Navigo Facilitates ₹510 Crore in Real Estate Sales

The post 🏢 Realty Stocks Open Strong as Market Eyes Policy Cues, Luxury Demand Remains Robust appeared first on Square Feat India.

While inflation remains subdued, several headwinds persist: corporate investment remains weak, and industrial output has slowed significantly, undermining growth momentum The Times of India.

Industry Voices: Mixed Signals on the Rate Path Ahead

Akhil Saraf, Founder & CEO, Reloy

He argues that, with inflation low and private investment depressed, a “substantial rate cut” is warranted. Lower rates, he says, would revive borrowing, boost demand and restore private-sector confidence — a “decisive push” at a critical juncture.

Vimal Nadar, National Director & Head of Research, Colliers India

Nadar notes that while the RBI has already delivered 100 bps of easing in 2025, including the June move to 5.50%, the bank is likely to maintain a neutral stance for now. Lower financing costs will benefit real estate developers, lenders and homebuyers—especially ahead of the festive housing season in late 2025.

Shrinivas Rao, CEO, Vestian

Rao emphasizes external headwinds, notably U.S. tariffs, urging caution. He expects the RBI to hold rates steady in the near term to maintain macro resilience but leaves room for rate cuts if inflation continues its downward trajectory.

Piyush Bothra, Co‑Founder & CFO, Square Yards

Bothra concurs on a wait-and-watch posture at 5.50%, given global uncertainties and incomplete transmission of earlier cuts. He sees a 25 bps rate cut in October as plausible—timed to support housing demand during the festive quarter.

Macro Context: The Tightrope Between Growth and Inflation

• Inflation trends: Inflation has moderated sharply—from ~3.16% in April to ~2.10% in June—providing the RBI room for further easing Reuters+4Reuters+4Reuters+4Reuters+1Jiraaf+1.
• Growth signals: While Q1 FY26 GDP expanded ~7.4%, industrial production slowed to a 10‑month low (~1.5%), raising concerns about underlying demand The Times of India.
• Global uncertainties: Elevated U.S. tariffs and trade shot at India pose headwinds; economists expect the RBI to monitor spillover risk before easing further ReutersThe Economic Timesdeccanherald.com.
• Policy shift: The RBI moved from an accommodative stance to “neutral” in June, suggesting further action would depend on incoming data rather than past momentum Reuters.

What Lies Ahead

• Markets largely expect the repo rate to stay at 5.50% in August, with approximately 75% of economists anticipating a hold during the MPC meeting on August 6 Reuters.
• Some forecasts—including one from SBI—suggest a 25 bps reduction later in August, to stimulate credit and give an “early Diwali” boost ahead of the festival season The Economic Times.
• Others, including Colliers, Vestian and Square Yards, see October as a more likely date for the next cut, contingent on inflation durability and full transmission of past rate moves.

Summary Table

Final Word

The RBI enters its August 6 Monetary Policy Committee meeting with subdued inflation firmly under control—but with growth signals and investment trends remaining worryingly soft. While most analysts expect the repo rate to remain unchanged at 5.50%, an October rate cut of 25 bps remains on the cards if inflation stays low and the RBI sees positive transmission.

Also Read: RBI Cuts Repo Rate by 25bps: A Boon for Homebuyers and the Real Estate Sector

The post RBI Expected to Hold Rates at 5.50%, but Experts See Case for Further Cuts appeared first on Square Feat India.

Stability in Borrowing Costs

For developers and homebuyers alike, the unchanged repo rate ensures stability in borrowing costs. With the rate at 6.5%, developers benefit from consistent financing conditions, allowing them to plan projects and investments with greater certainty. Similarly, homebuyers can count on steady mortgage rates, which helps maintain buyer sentiment in a challenging economic environment.

The neutral stance from the RBI reflects a careful balancing act—keeping inflation under control without stifling economic growth. While this strategy helps create a stable economic environment, it also means that home loan borrowers will continue to pay relatively high Equated Monthly Installments (EMIs), limiting affordability for many potential buyers. This dampens hopes for an increase in demand, particularly among first-time homebuyers who could have been encouraged by lower interest rates.

Developer Optimism Amid Government Initiatives

Despite the absence of a rate cut, developers remain cautiously optimistic about the sector’s growth trajectory. Government initiatives, including infrastructure development and urbanization, continue to support the real estate market. The sector has already seen significant investments, particularly in the residential segment, thanks to the current interest rate levels.

The neutral stance is seen as a boon for the affordable and mid-segment housing markets. It ensures that demand remains stable, even as the sector contends with inflationary pressures and price fluctuations in raw materials. Developers also hope that the government will offer more incentives, such as tax relief and policy support, to further stimulate demand.

“The RBI’s decision to maintain the repo rate at 6.5% reflects a measured approach to managing inflation without hampering economic growth. The neutral stance provides much-needed stability in the financial markets, which is crucial for the real estate sector. The unchanged rates will help maintain buyer sentiment, especially in the affordable and mid-segment housing categories,” said the President of NAREDCO Maharashtra.

The RBI’s approach is also seen as a positive signal for commercial real estate, with steady borrowing costs supporting momentum across both residential and office segments. Developers continue to launch new projects, and investor confidence remains high, particularly in grade-A office spaces.

Benefits for Luxury and Holiday Homes

While the neutral stance on rates ensures stability for most segments, it is especially favorable for the luxury and holiday home markets. Stable interest rates enhance buyer confidence, making it easier for potential investors to commit to high-end real estate. Markets in emerging areas such as Alibaug and Lonavala, which have witnessed increasing interest in luxury properties, stand to benefit from this stability.

“The decision to keep the repo rate unchanged is a welcome move, especially for the luxury and holiday home markets. Stability in interest rates enhances buyer confidence, particularly in emerging markets like Alibaug and Lonavala, which have been witnessing increased interest in these segments,” said the Founder of Iraah Lifespaces.

As buyers in premium segments are less sensitive to changes in interest rates, they are more likely to proceed with transactions despite the overall economic uncertainty. This stability also helps developers plan innovative and high-value projects without the pressure of fluctuating interest rates.

Challenges in Affordable Housing

The absence of an expected rate cut is disappointing for those in the affordable housing sector, where lower interest rates could have spurred greater demand. Higher home loan rates continue to impact the affordability of homes for the middle and lower-income segments. Industry leaders had hoped that a reduction in the repo rate would ease liquidity and provide an additional push to the housing sector, particularly for affordable housing projects.

The Co-Founder and CEO of Build Capital emphasized that while the neutral stance is a positive for maintaining steady borrowing costs, the industry also looks forward to long-term measures that could enhance liquidity and credit flow in the market.

“The RBI’s neutral stance and focus on balancing inflation and growth are positive signals for the real estate sector, ensuring stable home loan rates as well. With repo rates unchanged, stable borrowing costs will sustain momentum across residential and commercial segments. We urge the RBI to consider long-term measures to enhance liquidity and credit flow in the industry,” said the CEO of Build Capital.

Liquidity Support via CRR Cut

In a related move, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4%. This reduction enhances the liquidity available to banks, allowing them to lend more to the real estate sector. While the rate cut was not as significant as many hoped, the CRR reduction is expected to provide a boost to credit disbursements, especially in sectors like real estate, where financing plays a crucial role.

Anuj Puri, Chairman of ANAROCK Group, noted that while a repo rate cut would have provided a more immediate stimulus to housing sales, the CRR reduction could still have a positive impact by improving credit flow. He added that the sector was already buoyed by pent-up demand and improved affordability, with many expecting that the final quarter of the financial year would continue to show strong housing sales.

Impact on Major Markets

The unchanged repo rate ensures that large markets such as Mumbai and Pune will continue to see sustained demand, even as home prices rise. As per reports, average housing prices in major cities had already increased by 23% in the third quarter of 2024. In this scenario, the stability in interest rates ensures that homebuyers are not deterred by rapidly rising costs, while developers are not forced to hike prices further.

“Stability in interest rates is particularly beneficial for high-value markets like Mumbai and Pune. With steady interest rates, buyer confidence will likely increase, driving steady demand and supporting sector growth,” said the Joint Managing Director of Supreme Universal.

In Mumbai, the residential real estate market is seeing strong momentum, with low unsold inventory and a continued demand from end-users. Infrastructure projects such as metro expansions are expected to further boost the demand for housing in key residential areas.

Looking Ahead

While the RBI’s decision to hold the repo rate steady was expected, it has left some segments of the real estate market hoping for more decisive action. As developers continue to navigate a challenging economic environment, they are calling for more government support, particularly in terms of tax incentives, faster approvals, and more favorable liquidity conditions. The sector’s optimism remains high, buoyed by robust demand across urban markets and government-backed infrastructure initiatives.

“The RBI’s decision to retain the repo rate at 6.5% is a balanced approach to manage growth and inflation. With India’s GDP expected to grow at 6.5–7% in FY 2024-25, this stability is vital for maintaining economic momentum. A steady rate ensures consistent repayment terms, which increases the confidence of homebuyers and encourages investments in the sector,” said the Vice Chairperson of Nahar Group.

Overall, the RBI’s neutral stance on the repo rate is seen as a double-edged sword for the real estate sector. While stability in borrowing costs provides confidence to developers and homebuyers, the lack of a rate cut means that affordability challenges remain for many. Nevertheless, the sector remains resilient, with stakeholders expressing hope that the government will continue to offer supportive policies to sustain growth in the coming years.

Also Read: RBI MPC Meeting Begins Repo Rate Likely to Remain Unchanged, with Real Estate Sector Watching Closely

The post RBI’s Neutral Stance on Repo Rate: What It Means for India’s Real Estate Sector appeared first on Square Feat India.

Given the prevailing inflationary trends and the global economic landscape, market experts believe that the RBI’s decision will focus on maintaining stability. A stable repo rate is crucial for controlling lending rates, which directly impact consumer spending and corporate investments.

The real estate sector, in particular, is watching the MPC’s decision closely, with many anticipating a potential rate cut in the near future. The sector has shown resilience, but industry leaders emphasize that a reduction in the repo rate could provide a much-needed boost, especially for homebuyers in the affordable housing segment.

Industry Reactions to the Upcoming Decision

Manoj Gaur, CMD of Gaur Group and President of CREDAI NCR, stated that if the RBI maintains the repo rate, it will offer stability to the real estate market, helping build confidence among both developers and homebuyers. He added that while a rate cut could relieve homebuyers, particular attention must be given to the affordable housing segment.

Pradeep Aggarwal, Founder and Chairman of Signature Global (India) Ltd., echoed these sentiments, pointing out that the stability in the monetary policy has contributed to India’s resilience amid global uncertainties. He believes that any easing of interest rates could further stimulate the demand for housing, particularly in urban areas.

Amit Modi, Director of County Group, expressed optimism about a potential rate reduction, especially for the affordable housing market. He noted that while the luxury housing market may not see significant changes, a rate cut could reignite demand in the mass housing sector.

Impact on Homebuyers and Investors

Sanjay Sharma, Director of SKA Group, emphasized that a reduction in the repo rate would make home loans more affordable by lowering EMIs, thereby making homeownership more accessible. This, he argued, would not only strengthen consumer confidence but also accelerate growth in the real estate sector.

Rajjath Goel, Managing Director of MRG Group, pointed to the impressive 32% surge in housing prices in Delhi-NCR, attributing it to large-scale infrastructure projects and increasing buyer sophistication. He said that a rate cut would bring further stability to the market and attract long-term investments.

Mohit Kalia, Vice President of Raheja Developers, expressed similar views, stating that a reduction in the repo rate would ease the burden on homebuyers and stimulate investment. He added that such a move could help stabilize real estate prices, which have been fluctuating in recent months.

Sectoral Growth and Future Prospects

Dr. Gautam Kanodia, Founder of KREEVA and Kanodia Group, said that lower interest rates would act as a catalyst for further housing demand, particularly in emerging markets and smaller cities. This, he believes, would strengthen the housing sector’s growth trajectory.

Saurabh Saharan, Group Managing Director of HCBS Development, highlighted that the stability in the market over the past two years, driven by the RBI’s consistent approach, had been crucial for investor and homebuyer confidence. He is hopeful that a potential rate reduction would further encourage people to enter the market.

Ravindra Gandhi, Managing Director of Tirasya Estates, noted that the real estate sector had flourished, particularly in Tier-2 cities like Goa, Lucknow, and Chandigarh. He said that any move by the RBI to reduce or maintain the rate would continue to foster growth in these emerging markets.

Overall Economic Impact

Experts agree that the RBI’s upcoming decision will be pivotal not only for the real estate sector but also for the broader economy. The potential for a rate cut is seen as a step toward fostering economic growth, particularly in sectors like infrastructure and housing, which are key drivers of India’s economic progress.

Piyush Kansal, Executive Director of Royale Estate Group, suggested that the real estate sector had benefited from RBI’s positive stance in the past two years. If the RBI decides to lower rates, it would not only ease the financial burden on homebuyers but also stimulate the overall market, benefiting developers, investors, and consumers alike.

Ashwani Kumar of Pyramid Infratech added that a reduction in the repo rate would help enhance market liquidity and investor confidence, promoting long-term economic stability in the real estate sector.

Looking Ahead

As the RBI prepares to make its announcement, businesses and investors are staying vigilant, planning for the potential easing of financial conditions. The real estate sector is particularly focused on the implications of any rate changes, with many hoping for a move that will further fuel the sector’s ongoing growth.

While the RBI’s decision remains uncertain, the outcome of this MPC meeting is expected to have lasting effects on the Indian economy, particularly in real estate and housing markets, which are closely linked to consumer sentiment and investment patterns.

Also Read: RBI’s Upcoming Monetary Policy Announcement: Implications for the Housing Market

The post RBI MPC Meeting Begins Repo Rate Likely to Remain Unchanged, with Real Estate Sector Watching Closely appeared first on Square Feat India.

However, interest rates are just one piece of the puzzle. Property prices also play a critical role in influencing purchase decisions. According to ANAROCK Research, average residential property prices across the top seven cities in India have surged by 46% since 2021. More favorable interest rates could enhance overall affordability, potentially catalyzing housing sales during the upcoming festive season. Increased sales would benefit developers by improving cash flows and lowering borrowing costs for ongoing projects.

Moreover, a rate cut could revitalize market sentiment and attract investors back into the housing sector. Following years of stagnation, investors began returning to the market post-COVID-19, drawn by rising demand and prices. However, many have since adopted a cautious stance as property prices appear to have stabilized. More attractive lending rates could encourage these investors to re-engage with the market.

That said, experts urge caution. While recent cuts by the US Federal Reserve might suggest a similar move by the RBI, the global economic landscape is currently fraught with uncertainty due to ongoing geopolitical tensions. As such, the RBI may choose to maintain the current repo rate until these pressures subside.

As stakeholders await the announcement, the housing market remains on edge, hopeful for a boost that could drive sales and investment in the sector.

Note: This Article is based on the insights of Anuj Puri, Chairman, Anarock Properties

Also Read: Unchanged RBI Repo Rates: A Boon for Real Estate Growth

The post RBI’s Upcoming Monetary Policy Announcement: Implications for the Housing Market appeared first on Square Feat India.

In a resolute move aimed at preserving economic stability, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has decided to keep the policy repo rate unchanged at 6.5% for the ninth consecutive meeting. This decision, reached by a 4:2 majority, reflects the central bank’s cautious stance in the face of global economic uncertainties. The impact of this policy on the real estate sector is anticipated to be substantial, influencing borrowing costs and shaping investment sentiments as developers and homebuyers adjust to the current interest rate climate. Here’s how real estate experts are reacting to the announcement.

Here’s what real estate industry go to say on the repo rate.

Dr. Niranjan Hiranandani, Chairman, NAREDCO and Hiranandani Group, “The RBI’s decision to maintain the repo rate unchanged acts as a stabilizing force amidst the current volatile global economic environment. With concerns such as potential U.S. recession, the Bangladesh crisis affecting regional capital flows, and broader global uncertainties, stable home loan interest rates provide much-needed predictability. Although a lower repo rate could have boosted affordable housing, which has been impacted by higher interest rates, the current stability is crucial for NRI investors navigating fluctuating foreign exchange rates. This steady environment creates opportunities for both long-term and short-term real estate investments. However, it is essential for stakeholders to remain vigilant and closely monitor inflation trends, fiscal policies, and global economic developments to adapt their strategies effectively.”

Anuj Puri, Chairman – ANAROCK Group, “The RBI’s decision to maintain the repo rate at 6.5% for the ninth consecutive time is a positive development for the housing industry. This consistency in borrowing costs will encourage more aspiring homebuyers, particularly in the affordable segment, and drive demand in the housing market. Coupled with the recent announcement on indexation benefits, which reduces capital gains tax burdens and enhances the appeal of real estate investments, we can expect increased investor confidence and capital flow into the sector. This combination of stable interest rates and favorable taxation is set to boost housing demand, stimulate project construction, create job opportunities, and contribute to broader economic growth. The high housing sales across the top 7 cities in H1 2024 and the significant rise in residential prices further underscore the positive impact of these measures.”

Dharmendra Raichura, Vice President of finance of Ashar Group, said, “The Reserve Bank of India’s (RBI) decision to maintain the repo rate at 6.5% for the ninth consecutive time demonstrates its dedication to achieving the 4% Consumer Price Index (CPI) target. Despite a slight increase in headline inflation to 5.1% in June 2024, the central bank’s commitment to economic stability is evident. With GDP growth projected at 7% in FY25 and inflation at 4.5%, the stable interest rate environment fosters long-term investments in housing. As a real estate developer, we appreciate the significance of a steady repo rate, which influences borrowing costs and impacts the property market. The consistent repo rate provides a favorable environment for sustainable development and growth in the real estate sector.”

Saket Dalmia, President of India Sotheby’s International Realty, “The RBI’s decision to maintain the policy rate aligns with expectations given the current inflation and global economic scenario. While the near-term outlook for global growth appears positive, challenges persist in the medium term due to demographic shifts, climate change, and geopolitical tensions. Despite these factors, domestic economic activity remains resilient. The MPC’s focus on maintaining a disinflationary stance to ensure inflation aligns with targets while supporting growth underscores the importance of stable interest rates. This stability is particularly beneficial for the real estate sector. We support the RBI’s current stance and anticipate that future rate cuts will further bolster the real estate sector and contribute to overall economic stability and growth.”

Vimal Nadar, Senior Director & Head of Research at Colliers India, “Amid swift changes in global economic undercurrents and a moderate global economic outlook, the RBI’s decision to keep benchmark lending rates at 6.5% for the ninth consecutive time reflects a cautious stance. Although inflation remains above the benchmark of 4%, the RBI’s projection of a 7.2% GDP growth rate for FY 2025, supported by strong high-frequency economic indicators, is promising. The stability in interest rates, along with recent moves to rationalize stamp duty charges and provide concessions for women homebuyers, is favorable for the real estate sector, especially the residential segment. The partial withdrawal of revised LTCG tax applicability also provides room for increased housing sales with minimal tax impact, likely boosting investor and homeowner sentiment throughout 2024.”

Shrinivas Rao, FRICS, CEO of Vestian, “The RBI’s decision to keep the repo rate unchanged at 6.5% for the ninth consecutive time reflects a response to persistent inflation, elevated food prices, and global macroeconomic uncertainties. The steady monetary policy over the past year and a half has provided stability in the real estate sector, fostering demand across all asset classes. This positive momentum is expected to continue as the repo rate is likely to remain stable in the near term, despite rising inflation and increasing geopolitical frictions in the Middle East.”

Prashant Sharma, President, NAREDCO Maharashtra, “We welcome the RBI’s decision to keep the policy repo rate unchanged at 6.5%. This move reflects a cautious yet stable approach to monetary policy amidst global economic uncertainties. For the real estate sector, steady interest rates are a positive signal, creating a conducive environment for both homebuyers and investors. Maintaining this stability is crucial for fostering consumer confidence and ensuring sustained sector growth. We hope this decision will stimulate demand in the housing market, especially in the affordable and mid-segment categories, which are vital for the overall development of the industry.”

Pritam Chivukula, Vice President, CREDAI-MCHI and Co-Founder & Director, Tridhaatu Realty, “We welcome the RBI’s decision to keep the policy repo rate unchanged at 6.5%, which reflects a cautious and balanced approach. The real estate sector, particularly in metro cities like Mumbai, has been steadily reviving, and the current rate stability will help sustain this momentum. Homebuyers will continue to benefit from favorable lending rates, encouraging more investments in the housing market. However, we urge the government to consider additional supportive measures to enhance liquidity and provide long-term stability to the sector. Boosting consumer sentiment should be a focus, as it will drive growth in real estate and related industries.”

Rajeev Ranjan, Co-Founder & CEO, The Mentors Real Estate Advisory Pvt Ltd, “The decision by the Monetary Policy Committee to keep the policy repo rate unchanged at 6.5% is a balanced approach that reflects the current economic landscape. Stability in interest rates is crucial for maintaining buyer confidence and ensuring steady demand in the housing segment. While the unchanged repo rate continues to offer a favorable borrowing environment, it also signals the RBI’s intent to closely monitor inflation without disrupting growth. We anticipate that this stance will sustain the momentum in the real estate market, encouraging more homebuyers to take advantage of the existing financial conditions.”

Shraddha Kedia-Agarwal, Director, Transcon Developers, “We commend the RBI’s decision to maintain the policy repo rate at 6.5%. The real estate sector has demonstrated resilience amidst fluctuating economic conditions, and the stability in interest rates is a positive sign for both developers and homebuyers. This decision will help maintain the momentum in the housing market, encouraging potential buyers to invest in their dream homes with confidence. We remain optimistic that steady rates will continue to bolster the real estate sector and support overall economic recovery.”

Rohan Khatau, Director, CCI Projects, “The RBI’s decision to maintain the policy rate is a prudent step, as it helps control inflationary trends. The focus on managing inflation to support growth is commendable and will foster a favorable environment for the real estate sector, enabling growth and stability. We are optimistic that these measures will enhance consumer confidence and encourage homeownership, laying a strong foundation for future progress.”

Samyak Jain, Director, Siddha Group, “We welcome the RBI’s decision to maintain the policy repo rate at 6.5%, which reflects a positive approach toward sustaining economic growth while keeping inflationary pressures in check. The real estate sector has seen steady demand, and this RBI move provides continued stability, allowing homebuyers to benefit from favorable interest rates. We hope this stability will encourage more consumers to invest in real estate, driving further growth in the sector.”

Himanshu Jain, VP – Sales, Marketing, and CRM, Satellite Developers Private Limited (SDPL), “We welcome the RBI’s decision to maintain the key policy rate at 6.5%, which aligns with our economic growth policies. The focus on controlling inflation to stimulate growth will undoubtedly spur housing demand, benefiting both homebuyers and developers. We are optimistic that these policies will further enhance market confidence and drive sustained growth in the real estate industry.”

Also Read: Flex Spaces and Sustainability Drive Commercial Property Trends in APAC and India, Colliers Reports

The post Double Boost for Housing Sector: Stable Repo Rate and Indexation Benefits Fuel Market Optimism appeared first on Square Feat India.

CREDAI has highlighted that another hike in the repo rate would lead to even higher
borrowing costs for developers and make it a more challenging lending environment. This
would ultimately lead to even higher project costs and housing prices, on the back of
prices already increasing by 5-6% in the last one year. Coupled with rising raw material
costs, it would further reduce the wafer-thin margins that currently exist for real estate
projects, making certain projects financially unfeasible for developers.

CREDAI emphasized the direct correlation between repo rate and the country’s GDP
growth, pointing to the period from March 2021 to March 2022, where the repo rate was
hovering around 4-4.4%, leading to one of the strongest eras in the Indian economy, with a
GDP growth of 8.95% in that period.

Homebuyers, too, will face higher, almost double-digit home loan rates with a potential
repo rate hike, which could further deter them from purchasing a property, especially in
tier 1 cities. This could lead to a slowdown in the real estate market and result in
homebuyers postponing their purchase plans, reversing a trend in the post COVID era
wherein homebuying was on the rise.

Harsh Vardhan Patodia, President CREDAI, said, “In the last 1 year, the cost of
construction has risen rapidly due to the gradual increase in repo rates by the RBI, which
has adversely impacted many developers as they struggle to cope up financially. Another
repo rate hike would not only make certain projects financially unfeasible, but it would
also deter homebuyers as home loan rates will be at an all time high. Acknowledging the
support RBI has lent to the industry in the past, especially during peak COVID, CREDAI has
backed the need for a lower repo rate by stressing on the strong GDP growth numbers that
India could achieve during 2021- 2022, ultimately enabling a win-win situation for all
stakeholders involved.”

Also Read: Trend of rising office vacancy broken for the first time since Covid-19

The post CREDAI Urges RBI to Maintain Repo Rate amid Increasing Construction Costs and Rising Housing Prices appeared first on Square Feat India.

Here is what real estate industry experts have to say:

Dr Niranjan Hiranandani -National Vice Chairman- NAREDCO
“The Economic survey evidently indicated the upward growth trajectory of the Indian economy, corroborated by RBI  pegging the FY23-24 GDP growth rate at 6.4%. Indian economic resilience is reflected with improved capex, enhanced capacity utilization, improved urban and rural consumption, augmented investments and jobs creation. The geo-political tumultuous, recession signals, and weakening of  western economies will reorient the growth scale towards the booming economy of India. This  phenomenon will continue to draw high global traction which will fuel the demand across the real estate asset classes. The pricing index of the affordable housing segment will have detrimental cascading impact due to projected sticky core inflationary trend. Though surplus liquidity will power credit growth in the real estate sector, demand economics may be challenged  in the affordable house segment – which is the broad spectrum of the consumption pyramid. The outrageous hike of 250 basis point since May 2021, needs to be warranted before it turns negative for the ascending Indian economic  growth curve. The impact of home loan interest rate hike will be highly deterrent in the affordable housing segment as it will impact the price sensitive homebuyers and fatigue the supply of the developers. The luxury and mid housing segment players will remain cautious with a bit longer sales cycle.” 

Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
“Consecutive rate hikes by the RBI this year were aimed at re-anchoring the inflation expectations and maintaining financial stability. Thus far, the rising cost of house ownership led by higher EMI, higher stamp duty and other factors has not affected real estate sales, which is a firm indicator of genuine demand for housing. But any further hike in the repo rate might temporarily limit the growth momentum of the real estate sector. Although the recently concluded budget was tailor-made keeping the salaried and the middle class in mind, a rate cut at this stage could have triggered the sentiments of the homebuyers sustaining the growth momentum.”

Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
“RBI ‘s decision to hike the interest rates to tackle the inflation and ensure domestic economic recovery was a no-brainer. But a rate cut would have been a big booster for the real estate sector which was overlooked in the recently concluded budget. The sharp acceleration of rates consecutively for the sixth time in a short period will have a short-term effect on the sentiment of homebuyers as low interest rates have been the biggest factor in the resurgence for real estate demand in the last two years. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to boost the sentiments.”

Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL)
“Keeping the current market conditions and inflation in mind, the move by the RBI was expected to keep the economy on the track in the current highly volatile scenario. The rising property prices had already added to the woes of the homebuyers and now the decision of RBI to increase the repo rate will temporarily dent the current demand momentum. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and these short-term decisions are likely to have a major impact on a buyer’s decision.”

Bhushan Nemlekar, Director, Sumit Woods Limited
“Earlier, due to the pandemic and the geopolitical issues, the input costs were already high and now with these consecutive rate hikes, it will only dampen the spirit of the entire real estate value chain. The cost of borrowing for both developers and buyers will be impacted and this will result in undesired rate hikes across the spectrum. However, we did not see much impact on the buying spree in the last couple of quarters since there are genuine buyers in the market to keep the momentum going.”

Dr. Sachin Chopda, Managing Director, Pushpam Group
“RBI’s decision to hike the policy repo rate was anticipated, factoring the rise in inflation. The rate hike is likely to shrink liquidity in the economy overall, especially impacting the investor’s sentiments. There will be a short-term pause on the minds of the investors while assessing the volatility of the current market dynamics. However, they are bound to return soon in the market once it is stable.”

Dinesh Doshi, President, NAREDCO Progressive Neral Karjat Unit
As expected, RBI has raised the repo rate by 25 basis points to 6.5%. The obvious impact on home buyer sentiment is expected – mostly in affordable and budget segments – although overall, housing sales are not likely to be majorly impacted. With retail inflation finally within its tolerance band of 2% to 6% in the last two months of 2022, hopefully, we are at the end of the ‘hike rates’ cycle, and should not have any further home loan EMI hikes. Home buying sentiment should be positively impacted in days to come, with festivals like Gudi Padwa adding to the positive vibes.

Also Read: RBI RR Hike to Impact home sales

The post RBI hikes repo rate by 25 bps to 6.5%, EMIs to get costlier appeared first on Square Feat India.

The 25 bps rate hike is much along the expected lines. With repo rates now at 6.5%, there could be some repercussions on housing uptake as home loan interest rates will head further north. The rates had already crept up after five consecutive rate hikes over the last one year. This will add to the financial burden on homebuyers as apart from home loan interest rates, property prices have also inched up in the recent past two to three quarters.

Given that interest rates may breach the 9.5% mark with today’s hike, we may see some pressure on sales volumes in the affordable and lower mid-range housing segments, which are more cost-conscious. The affordable segment has already been in the doldrums, and adding further to the cost of acquisition obviously does not help.

That said, the Indian housing market continues to be largely end-user driven – and end-users, unlike investors, focus less on ROI and more on the perceived value of homeownership. Furthermore, commodity prices are now falling and inflation is moderating. As such, we are unlikely to see any hikes in the near future, which will be positive for the housing sector in the times to come.

The monetary policy impacts real estate demand in several ways. When the central bank raises interest rates, borrowing costs for buying real estate increase, which can reduce demand for housing. Conversely, when interest rates are low, borrowing costs are lower, and demand for real estate may increase. Also, an expansionary monetary policy, which increases the money supply, can lead to increased consumer spending and borrowing, potentially driving up demand for real estate.

Finally, confidence in the economy is closely tied to the monetary policy. When the central bank is seen as effectively managing the economy and maintaining stability, it can increase consumer confidence and demand for real estate.

Also Read: RBI RR Hike to Impact home sales

The post Monetary Policy – Rate Hike As Expected, May Further Impact Affordable Housing Demand appeared first on Square Feat India.

With the inflationary pressures evident across the world, many countries have seen back-to-back interest rate hikes in the recent past. India is closely knit to the global economy and had to take remedial actions to control inflation, which is driven by domestic as well as global factors.

In the wake of a surge in crude oil prices and the geo-political tensions, inflation has reared its ugly head in India. The Reserve Bank of India (RBI) was prevailed

upon to announce a series of rate hikes to counter it, and the process is far from over. The repo rate stands at 5.4% as of now and the RBI may hike rates by 50 bps in the upcoming policy meet.

Declining interest rates were a key reason for the massive housing demand surge in the past two years. Also, the pandemic reinstated the importance of owning physical assets like real estate. This time around, the demand revival even included the previously rent-favouring millennials – who continue to be on the market for homes.  

The RBI had cut interest rates from 5.15% when the pandemic hit to as low as 4%. Since May this year, we have witnessed interest rates back on an upward climb. 

Will another rate hike impact housing demand? This is less than likely. To begin with, it had always been clear that the low interest rate regime was a short, sweet, and ultimately unsustainable interlude. It was

required during and immediately after the worst Covid-19 waves, which had seriously intimidated Indian consumers at all levels. Thankfully, their departure is gradual, leaving space for a softer landing to a consumer base which is historically accustomed to high interest rates.

A degree of discomfort notwithstanding, a 50-bps hike should not seriously hamper homebuyers’ sentiments. Moreover, the festive season is around the corner. This is a period when developers usually roll out various freebies and offers, and we may even see fixed interest rate guarantee plans announced this year. While considering the festive offers, homebuyers will zero in on those which directly help contain their overall transaction cost.

Also Read: RBI Repo Rate Hike May impact Home buyer sentiments

The post RBI Monetary Policy – Can the Housing Market Absorb Another Hike? appeared first on Square Feat India.