Hope returns, interest rate remains key

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SummaryThe stage seems to be set for the real estate sector to take a turn for good times again.

Das, chief economist and director-research, Knight Frank India.

Industry veterans say that the cut in home loan rates by banks has occurred after nearly a year, and will augur well for investment sentiments in the market. "If home loan interest rates go down further, home buyers and realty investors — especially in the housing market — will be encouraged to make purchase decisions. Going forward, the RBI may be expected to maintain stability or reduce base rates. All in all, a positive signal for the investment climate in India's realty sector; and a likely indication of a gradual economic recovery," said Anshuman Magazine, Chairman & MD, CBRE South Asia.

However, a big worry for the real estate sector is will the good times last? The RBI Governor has said the central bank was waiting for more data, which means if inflation rises, it could start hiking again. "It is good that RBI has decided to resist the temptation of raising the rates. This may provide a temporary relief. It still leaves a hanging sword by postponing the decision to next month. It has been established that the government has not been able to bring down the inflation, particularly the food inflation despite bumper food production. We believe that emphasis needs to be given to initiatives that will result into growth," said Sunil Mantri, president of the National Real Estate Development Council (Naredco).

Real estate players are keeping their fingers crossed with a prayer on their lips — that inflation should come down and the RBI should not raise rates again.

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