The RBI’s decision to cut the repo rate by 25 basis points has come at a time when India is gearing up for the festive season. India is a land of many festivals. And buying any property during this time is considered auspicious, specially during the festive season of Navratras and Diwali, which is just 2 months away. During this time the real estate sector becomes extremely active. The RBI’s repo rate cut by 25 basis points could not have come at a more suitable time. This will lead to cheaper home loans and boost the developer and customer sentiment. In terms of the festive season, buyers look more confident and it will boost the housing sales as home loan EMIs are expected to come down. The yesterday’s rate cut is expected to propel banks to cut down their lending rates further.
Narendra Modi’s ambitious vision of housing for all by 2022 will surely get a boost as customers from the affordable section will majorly get benefited by the rate cut. Luxury property or property for investment purpose would not see much of a difference. The lower income group expects that the rate cut will help them in getting home loans at reduced interest rate of 8.1%, which is currently at around 8.35%-8.5%.
Speaking to Financial Express.com, Sriram Kalyanaraman, CEO of National Housing Bank, said, “The RBI’s rate cut will definitely boost the buyer’s sentiment. It will increase the affordable segment which caters to the lower to middle income group. As far as investment is concerned, that will not see a bigger change as the buyers who will get maximum benefit come under the bracket of affordable housing (25 lakh to 30 lakh).”
He further added that “RERA, GST and now the RBI’s decision to cut the repo rate by 25 basis points would boost the sentiment of customers further.” The government had also mentioned earlier that GST should not increase the rate of home loans. Real estate is going through a downturn and such positive steps will help revive the sector.
During the festive season, developers come up with many offers and deals, which are likely to lead to an upsurge in housing sales. Last year, developers like Gaursons India Ltd, Paramount Group, Ajnara India Ltd, Antriksh India, Gulshan Homz and a few others came up with deals to attract buyers. This year too, it is expected that buyers will look forward to such value offers. In addition to the recent rate cut, GST benefits and RERA will boost the sentiment further.
In most of the Indian cities, developers have seen a rise in unsold inventory due to the protracted slowdown in property markets. Lower sales have induced a sea change in pricing strategies. This factor too may fuel up the buying sentiment during the festive season as it will lead the ticket sizes to come own even in the case of ready-to-move in properties. Buyers from the affordable segment will benefit the most, and the spurt in sales will make vision of housing for all by 2022 achievable.