Hail Shaktikanta, Realtors Chorus

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Hail Shaktikanta, Realtors Chorus

Happiness over status quo of interest rates

Real estate developers have welcomed ‘balanced’ and ‘pragmatic’ monetary policy of RBI amid global and domestic compulsions.

MUMBAI, Apr 8 (The CONNECT) - Despite inflation edging higher in the aftermath of the Russia-Ukraine war and surging oil prices, the RBI has again decided to keep the repo rates unchanged at 4% and reverse repo rate at 3.35%, said ANAROCK group chairman Anuj Puri.

Repo – or repurchasing option - rate is the rate at which RBI lends funds to banks in case of a shortfall and reverse repo rate is the interest that the central bank pays to banks which park their funds with the former.

Puri felt that the real estate industry had been gearing up for an increase in the repo rates, and the fact that this has not happened is obviously positive for home loan borrowers. Developers' input costs have been inflating steeply and a hike in property prices is not more or less inevitable. Moreover, the acquisition cost in Maharashtra has gone up by 1% on account of the metro cess applicable from this month. To this sombre backdrop, increased home loan lending rates would have been a considerable setback, he said.

Homebuyers have a continued opportunity to avail of decadal low home loan interest rates. The overall cost of living has increased significantly since the Ukraine debacle began playing out, and the RBI has taken a proactive and necessary step to maintain relative housing affordability in the country, he added.

Ramesh Nair, CEO, Colliers India and Managing Director, Market Development, Asia, Colliers pointed out that RBI continues to keep the repo rate unchanged for the 11th time in a row, at 4%, keeping an ‘accommodative’ stance during its first monetary policy meeting for FY 2022-23. This will greatly help the economy recover to pre-Covid-19 levels at a time when the economy is steadily gaining ground.

The geopolitical scenario on the global front and other challenges have led the RBI to lower its growth forecast to 7.2% from 7.8% for FY2022-23. However, the Indian economy appears to be well placed to withstand the shock supported by its forex reserves and stable financial sector. From a real estate perspective, the unchanged repo rate will continue to provide elbowroom to homebuyers, since home loan rates are at a record low. 

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said, The RBI played the role of the Good Samaritan by maintaining the status quo on rates despite inflationary pressure. “There may be criticism from a macro-economic perspective, but we need to understand the fact that the RBI is playing a complex game of balancing growth with inflationary pressure,” he said.

“From a real estate perspective, this is good news for home buyers as no change in the repo rate means home buyers can avail the decadal low interest rate for their new home purchases,” he said.

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI, said "For the first time since the pandemic, inflation has emerged as a bigger concern than growth for the RBI and therefore the decision was on the expected lines.

"In the past couple of years, the homebuyers have made the most of the rock-bottom interest rates on home loans along with offers from good developers and the upcoming occasions such as Akshaya Tritiya will fetch them yet another chance to do so,” Pritam said.

H pointed out that the sector has already started witnessing an upward revision in the property prices due to the rising construction costs and higher stamp duty as a result of the metro cess and ready reckoner rates.

Dr. Sachin Chopda - Managing Director, Pushpam Group, welcomed the RBI's decision of keeping the key rates unchanged amid the global uncertainties. This would encourage the prospective homebuyers to still close-in on their property investments, he said.

Shraddha Kedia-Agarwal, Director, Transcon Developers said RBI maintaining status quo on key policy rates was anticipated given the inflationary concerns in recent months along with the macro-economic factors like the Russia-Ukraine war and the hike in the commodity prices.

Bhushan Nemlekar, Director, Sumit Woods Limited, said The Government has always taken affirmative measures towards the recovery of the economy with sustained fiscal and monetary support.

“With the prevailing low home loan rates for homebuyers, the real estate sector has already been immensely benefited. This decision will further boost the consumer sentiments while sustaining the growth momentum in upcoming months," Nemlekar said.

Jitesh Lalwani, President, Home Sync Real Estate Advisory, said ''Keeping in mind the economic concerns owing to the inflation amid the global uncertainties in near future, we welcome the RBI's decision to continue with their accommodative stance. The measures announced were much needed to amplify the liquidity in the economy and are considered as a progressive step towards the revival of the real estate sector. The RBI's decision will boost the homebuyers' confidence to make their purchase of owning a dream home."

Amit Goyal, CEO, India Sotheby’s International Realty appreciated RBI's stance to defend the growth momentum of the  Indian economy and keep key rates unchanged. This is significant for the housing sector, which has just about regained its sales velocity, he said.

Rahul Pande - Director, Justo Realfintech Pvt. Ltd, said lower home loan interest rate was one of the major factors for pushing real estate sales in the last two years of the pandemic. RBI’s decision will further help boost the confidence of new homebuyers, who would still want to avail the benefits of reduced interest rates before the developers pass on the additional burden of input costs to the homebuyers, he said.

Harresh Mehta, Chairman and Managing Director of Rohan Lifescapes, commended RBI policy and said it will help contain inflation and maintain liquidity will help in keeping the sentiment optimistic which is very much needed in order to promote the growth of the housing market in India. With the current geopolitical crisis, the sector is facing the brunt and with such decisions it will boost the growth of the sector in a positive way.

With such an accommodative decision, the end-user demand is set to be back in the market which will ultimately give a push to the supply chain. Overall, it is a balanced decision taken by the RBI, Mehta said.

Sandeep Runwal, President, NAREDCO Maharashtra, said RBI has ensured that the growth remains unhindered without any further deceleration. It has also attempted to normalise the liquidity corridor by introducing a long-awaited Standing Deposit Facility, which may absorb excess liquidity from the banks. It has also hinted at gradual and calibrated withdrawal of liquidity in a non-disruptive manner beginning this fiscal. On the real estate front, the crude prices - led inflation coupled with rising costs of material, increase in metro cess, ready reckoner and stamp duty rates, etc have a huge bearing on the real estate pricing. While the sector needs more liquidity, it equally needs a breather for rising costs, he said.

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