Real estate experts and developers welcomed the RBI move, saying that the move will serve the realty market well in the festive season.
The Reserve Bank of India (RBI), as widely expected, kept its key policy rates unchanged in its bi-monthly monetary policy review meeting today, while maintaining its accommodative stance for the eight consecutive time to support growth.
Real estate experts and developers, however, welcomed the RBI move, saying that the move will serve the realty market well in the festive season.
“As expected, the RBI maintained the monetary policy pause, keeping the repo rate unchanged at 4% and reverse repo rate at 3.35%. In short for homebuyers, the low home loan interest rates regime will continue in the market and help foster housing demand during the ongoing festive season. Notably, this is a period when housing sales usually surge on the back of attractive offers by developers and lending banks,” said Anuj Puri, Chairman, ANAROCK Group.
In fact, the green shoots of economic revival coupled with the prevailing low interest rates will be conducive for the residential sector in the short to mid term. ANAROCK Research indicates that at least 10-15% growth in housing demand can be seen in the ongoing festive period (October-December) across the top 7 cities against the preceding quarter. In Q3 2021, the top 7 cities saw total housing sales of nearly 62,800 units – already the best quarterly sales since the pandemic.
“If ANAROCK’s predictions are accurate, the ongoing festive quarter will see at least a 35-40% yearly rise in overall housing sales across the top 7 cities as against the same period in 2020. In Q4 2020, the top 7 cities saw total housing sales of nearly 50,900 units,” added Puri.
Shishir Baijal, CMD, Knight Frank India, said, “Over the last few quarters, there has been a fundamental change in buyers’ expectations and attitude towards home ownership, which has resulted in the residential real estate sector perform exceedingly well across all segments. Many factors, especially demand stimulants like stamp duty cut and lower circle rates along with lowest ever home loan rates, have helped in converting latent demand to sales. RBI’s accommodative stance will allow banks to continue providing home loans at the current levels.”
At this juncture the industry is favorably poised with an encouraging ramp up on vaccination rate across the country, ongoing festive season, and opening up of the country. The time is right to ensure an orbital shift for the industry. Significant and timely measures for a sector like real estate, which has strong linkages with several other industries, would translate into a significant push to overall economic growth of the country.
The RBI’s status quo on policy rates means a continuation of low home loan rates which will keep the demand momentum for homes going.
“For the 8th consecutive time, the RBI has kept repo rates unchanged at 4%. We predicted that the repo rate will remain constant to boost consumption in the ongoing festive period. It will go a long way in steering housing sales. Several banks have already lowered their home loans rates by a stable repo rate since September 2021. Overall, it is a good time for homebuyers who can avail of low home loan rates, along with steady prices,” observed Ramesh Nair, Chief Executive Officer | India and Market Development | Asia, Colliers.
Amit Goyal, CEO, India Sotheby’s International Realty, said, “In the last couple of months, we have witnessed a further reduction in interest rates of home loans to 6.5% per annum by leading financial institutions. The RBI governor has also announced that there are strong signals of recovery in the service industry, especially in IT services. The expected GDP growth target for the current fiscal has been raised as well. Factors also indicate softening of inflation in the near term. All in all, this brings in a lot of confidence in the Indian economy, which itself is a big positive for the housing sector.”
Industry experts expect residential sales to further increase in the coming months as home loans would remain cheap.
Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, said, “The RBI’s decision to maintain the repo and reverse repo rates at 4% and 3.35% has come at an opportune time, with the country gearing up for the festive season which often sees a spurt in residential sales. As loans would remain cheap, we expect residential sales to further increase in the coming months. The RBI’s focus on reviving and sustaining growth through its accommodative stance while keeping an eye on inflation levels is expected to accelerate the economic recovery, as is evident from the fact that the central bank expects the country to grow at 9.5% in FY 2021-22. Therefore, we are optimistic that this unprecedented growth would augur well for India’s real estate market as well.”