Developers, however, feel that the RBI decision to keep the repo rate unchanged will make sure that home loans continue to remain at attractive rates, which also augurs well for home buying sentiment.
A further cut in the key rates would have given a boost to the current demand uptick that we have seen recently.
As widely expected, the Reserve Bank of India kept both the repo rate and the reverse repo rates unchanged at 4% and 3.35%, respectively, while maintaining an accommodative stance in its first FY21 meeting on Wednesday.
Commenting on the RBI policy announcement, realty experts said that with consumer inflation still trending at the upper end, the RBI intends to keep an eye on it in the coming months. India is witnessing its worst second wave of COVID-19, thereby raising some uncertainty. On a positive, the real GDP forecast for the FY 2021-22 remains strong at 10.5% in the wake of the vaccination drive that is in full swing in India.
“While repo rates will remain the same and home loan rates may remain stable, the incentive period for lower rates (starting from 6.7%) expired on March 31. SBI has already reverted to their normal rates and other banks will also follow suit. This may have some impact on the housing demand, especially in Maharashtra where the stamp duty cuts coupled with lowest-ever home loan rates had significantly boosted housing demand. Now, with stamp duty cuts not being extended and benefits of lowest-best home loan rates also being rolled back, we may see some decline in overall sales volumes,” said Anuj Puri, Chairman, ANAROCK Property Consultants.
Some developers, however, feel that the RBI decision to keep the repo rate unchanged is understandable at this juncture and will make sure that home loans continue to remain at attractive rates, which also augurs well for home buying sentiment.
“Residential demand is reviving in the pandemic context and this needs to be fostered. A further cut in the key rates would have given a boost to the current demand uptick that we have seen recently. Our country is recovering fast from the Covid-induced slowdown due to revival in domestic consumption – which has greatly benefitted from the benign interest rate regime, infusion of liquidity as well as stable returns of real estate investment compared to other investment instruments,” said Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group, known for luxury holiday homes in Goa.
The IMF has projected an impressive 12.5% growth rate for India in 2021, stronger than that of China, which augers well for the real estate sector too. “As the economy is gradually opening up and getting back on track to restore the lost momentum, we feel that special attention should be paid to the real estate sector which contributes significantly to the country’s economic growth,” he added.