For the seventh consecutive time, the Reserve Bank of India maintained its pause on key policy rates on Friday, maintaining its ‘withdrawal of accommodation’ stance. This move aims to keep inflation in check within the targeted range while sustaining market momentum. The central bank’s strategy reflects careful consideration of robust economic indicators, amidst factors such as monsoon performance, US federal decisions, and overall economic growth, ensuring continued high growth prospects for the country.
According to industry experts, the decision to maintain status quo is positive news for future homeowners, as borrowing costs won’t see an increase, making buying a home more accessible. This will also keep the ongoing residential real estate sales momentum on course and unimpeded. Thus, aspiring homebuyers eyeing a purchase will proceed with confidence.
“Housing sales across the top 7 cities have been phenomenal in the last few quarters, even though prices are rising steadily. As per ANAROCK Research, we saw total housing sales of over 1.30 lakh units across the top 7 cities in Q1 2024 – the highest quarterly sales in the last decade. Average residential prices across these cities have seen a significant jump in the last one year – ranging between 10-32% in Q1 2024 when compared to Q1 2023. Thus, the breather which RBI’s unchanged repo rate will provide to home loan borrowers is apt and welcome,” said Anuj Puri, Chairman, ANAROCK Group.
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Dhruv Agarwala, Group CEO, Housing.com & PropTiger.com, said, “The RBI leaving the repo rate unchanged for the seventh time in a row amid improving growth numbers and moderating inflation augurs well for the real estate sector in India. Not only would this reflect in stability in housing loans but also in property prices since the cost of borrowing would remain stable for developers as well. This is going to work tremendously well for the economy in general and the sector in particular.”
Ashwin Chadha, CEO, India Sotheby’s International Realty, said, “This strong growth trajectory is expected to sustain adequate demand, particularly in the luxury segment of the real estate market. Stable rates are poised to support the housing market, and we anticipate a potential reduction in interest rates in the upcoming MPC meetings.”
For the real estate sector, the decision offers a sense of continuity and predictability. It also provides a solid foundation for future investment and development initiatives.
“Developers and investors can capitalize on the conducive environment to explore new opportunities and drive innovation in the market. Moreover, unchanged lending rates continue to present EMI dependent buyers a rational opportunity to fulfil their home-ownership aspirations. With anticipation of rate cuts in the ongoing fiscal year, the momentum in residential segment is likely to persist,” said Vimal Nadar, Senior Director & Head-Research at Colliers India.
Realty consultants say the RBI decision to maintain status quo is a welcome development for the Indian housing market. The policy continuity fosters a predictable interest rate environment, which is crucial for both homebuyers and developers.
“We anticipate sustained demand, especially in the mid-tier and high-income segments,” said Dr. Samantak Das, Chief Economist and Head- Research & REIS, India, JLL.
India’s residential markets are currently in the midst of a sustained bull run. Sales in the country rose to over 74,000 units in Q1 2024, up 9% from the quarterly run rate of 2023. If controlled inflation persists, the possibility of future rate cuts becomes more realistic. This would lead to increased affordability levels in 2024, which will be second only to 2021 peak affordability levels reported in JLL’s Home Purchase Affordability Index.
“The momentum is slated to continue with the current pause and potential rate cuts in H2 FY25 expected to support the growth cycle in the sector. This scenario would further incentivize buyers on the sidelines and is expected to significantly boost overall market sentiment, pushing residential sales in the top seven markets of India to another historic high of over 3,00,000 units in 2024,” added Dr Das.