In the first MPC meet of FY24, the RBI took the bold step on Thursday to focus more on growth despite uncertainties especially in advanced economies. The decision to pause the rate growth cycle, keeping benchmark lending rates unchanged at 6.5%, has been received positively by markets and industry experts alike.

Industry experts believe that with clear growth-oriented signals for the rest of the year, investor confidence is likely to get a significant boost in the coming days.

“The financial stress on part of select developers and homebuyers is likely to get a relief from the pause in rate hikes. All of this is expected to translate into sustained demand in residential real estate. Moreover, with this balancing act of RBI, affordability of home-ownership is expected to remain intact. However, real estate stakeholders will remain watchful of the macro-economic situation and policy response in the near term,” said Anurag Mathur, CEO, Savills India.

This was the first bi-monthly monetary policy review in the new financial year and the realty sector was hoping for the RBI to pause the repo rate hike.

“Keeping the repo rate unchanged at 6.50 per cent is a supportive move of RBI for rate-sensitive businesses. We expect the economic conditions to remain stabilised to a large extent and inflation is also expected to remain range-bound in the coming months with a positive outlook. The unchanged repo rate is likely to offer a sense of encouragement for millions of homebuyers and will help maintain the current growth momentum in demand and sales of housing units,” said Atul Banshal, Director Finance, Omaxe Ltd.

Despite the rate hikes in the past, the housing segment has successfully maintained demand momentum across price points. “With a long-term perspective focusing on broader economic indicators and market conditions, RBI’s stance on unchanged rates offers a balanced outlook,” added Banshal.

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With the RBI’s supportive approach, real estate developers expect the market sentiment to remain upbeat.

Parvinder Singh, Chief Executive Officer, Trident Realty, said, “We welcome the RBI’s decision to keep the repo rate unchanged at 6.50%. The real estate sector is prone to the quick impact of interest rate movements and in the rising interest rate cycles, the unchanged repo rate is likely to keep the homebuyers’ sentiment intact, further helping to maintain the sustained growth momentum. The real estate sector is witnessing a healthy growth cycle and with the government’s supportive approach, we expect the market sentiment to remain upbeat.”

Santosh Agarwal, CFO and Executive Director, Alpha Corp, said, “The RBI announcement will undoubtedly boost the market sentiment after the Union Budget and boost the housing segment as well. The real estate sector has experienced significant growth during the past few quarters. Maintaining the accommodating position would allow banks to continue lending mortgages at the present rate, which is very encouraging for homebuyers and developers alike.”

Although the RBI has not reduced the repo rate, but after a long hiatus of high inflation and increasing rates, the pause on rate hikes can surely be termed as a respite for homebuyers.

Ashish Narain Agarwal, Founder & CEO, PropertyPistol, said, “The RBI has kept the rate unchanged which is a very positive move. After a long hiatus of high inflation and increasing rates, this can be termed as a respite to homebuyers as it will not affect their EMIs much. Although not reduced, the unchanged rates can be a welcome move for the realty industry as experts were looking for rate cuts.”

“The RBI decision is not entirely what we were expecting, but at least it did not go for another hike, which is a great relief in itself. The continuous cycle of increasing home prices, which was a consequence of hikes in repo rates and home loan interest rates, has drifted many homebuyers from the property markets who might consider buying homes now,” said Sulekh Jain, Chairman, DPL Homes.

“The RBI decision to retain the repo rate at 6.50% in the face of persistently high inflation reflects a cautious posture intended to strike a balance between growth and price stability. However, given the government’s growth-focused fiscal budget announcement earlier this month, as well as the optimistic market sentiments, it is clear that demand for housing will skyrocket in the coming months,” said Jatin Lohia, Director, LID.

Subhash Goel, Director of Goel Ganga Developments, said, “The RBI’s repo rate pause is an essential move to strengthen real estate competence, particularly in the residential sector. Customers prefer to acquire real estate from renowned developers since there is a rising demand for it, particularly among buyers in the mid-range and affordable price ranges. After a period of upheaval when Anarock Research found that the affordable housing segment saw its overall sales share drop to 20% in 2022 from 40% in 2018, the RBI’s pause on the repo rate hikes will be a major boon for homebuyers after the union budget and amid prevailing housing segment.”

Manoj Gaur, President CREDAI NCR and CMD Gaurs Group, said, “We welcome the RBI decision to keep the repo rate unchanged. In the past RBI’s increase of rate 6 times consecutively was creating a negative impact on potential buyers. If the interest rates are kept at this level for at least 2 quarters, the market sentiment will get a further boost because buyers will have no financial worries as well as the fear of having to pay higher interest rates on home loans.”

The unchanged repo rate may also lead to an increase in FDI inflows into India.

Amit Jain, Director, Mahagun Group, said, “In recent years, interest rates have increased considerably. Even though the world’s top economies continue to increase interest rates, the current situation, in which the RBI made the courageous decision to keep interest rates unchanged, presents a good option for investors and people who want to purchase or invest in a house. By keeping the interest rate constant, the Indian market becomes considerably more competitive and alluring on a global scale. This could lead to increased foreign direct investment (FDI) into India.”

Some developers, however, believe that only a pause on the rate hikes is not enough and the apex bank should go for rate cuts also to give a boost to the homebuyer sentiment.

Saransh Trehan, Managing Director, Trehan Group, said, “The RBI’s pause on the rate hikes is a huge reliever for home buyers and realtors in the period which has seen a massive jump in home prices, properties, and bank loan schemes. If the move does not guarantee a decrease in skyrocketing prices of homes, it assures that there is no reason for a further upswing in prices. We hope that RBI also considers lowering the repo rate to stabilise market prices and bring a good majority of buyers to the investment circles.”