Real estate hails RBI move of keeping rates unchanged in festive season; Here’s what realty experts said

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Updated: October 5, 2018 10:11:42 PM

A majority of industry experts hailed the apex bank's move of keeping the key policy rate unchanged, saying that any hike in the repo rate would have impacted consumption sentiments and also the real estate sector.

RBI policy meet, monetary policy review, real estate, repo rate, festive season, The hike in repo rate might have impacted consumption sentiments negatively ahead of the festive season.

The RBI in a surprise move kept the repo rate unchanged at 6.5% in its October monetary policy review on Friday, which surprised almost everyone, including the market and real estate. While some realty developers and experts welcomed the move, others termed it as a worrisome development from a macro-economic perspective.

For instance, Anuj Puri, Chairman, ANAROCK Property Consultants, said this is surprising and contrary to the industry’s expectations, which skewed more towards an increase on the back of increasing inflation and depreciation of the rupee.

“This move could have been seen as favourable for the real estate sector in the short-term; however, banks have already started increasing their lending rates even before the monetary policy was announced. It is, in fact, a worrisome development from a macro-economic long-term perspective. It will result in increased fiscal deficit, which does not bode well for any industry, including real estate, and also in further erosion of the rupee’s value,” he said.

A majority of industry experts, however, hailed the apex bank’s move of keeping the key policy rate unchanged, saying that any hike in the repo rate would have impacted consumption sentiments and also the real estate sector.

“The decision by the RBI to keep key rates stable was taken in the backdrop of inflation being largely in control. The move imparts flexibility to the RBI to move in either direction in the coming months. Any hike in repo rate would have impacted consumption sentiments and also the real estate sector. Also, the change in stance of the RBI from neutral to calibrated tightening is an indication of the intent of the RBI to keep inflation levels in check,” said Anshuman Magazine, Chairman, India and South East Asia, CBRE.

Here’s what developers said:

Surendra Hiranandani, Chairman & MD, House of Hiranandani: “The Central bank seems to have taken the broader economic and liquidity scenario present in the market before making the move. The hike might have impacted consumption sentiments negatively ahead of the festive season. From a consumer’s perspective, home loan rates are attractive. So, they must utilize this opportunity and make their purchases by cashing in on deals in the market.”

Dhiraj Jain, Director, Mahagun Group: “The RBI’s decision to keep the policy rate unchanged is a clear indication that the apex bank wants to maintain its vigilant stance in the near future. With the unchanged repo rate, the interest rates will also be the same and this will keep on attracting the buyers to invest in the real estate sector. Above all, the upcoming two months are dedicated to festivals, which will flourish the market and uplift the sentiments of buyers.”

Gaurav Gupta, General Secretary, CREDAI Ghaziabad & Director, SG Estates: “A rate cut of 25 bps could have helped ease the pressure off the market which has been balancing itself for the last two monetary policy reviews which witnessed the hike in repo rate. However, with no rate change announced in this monetary policy review, we expect the market to witness only a static demand in the short run.”

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com: “The decision of the RBI not to reduce the rates until it gets fully convinced about inflation control is very justified. But as we move closer to the festive season, a rate cut today would have allowed the potential buyers to plan their investments in the property market in a better way.”

Pradeep Aggarwal, Co-founder & Chairman, Signature Global, and Chairman, National Council on Affordable Housing, ASSOCHAM: “Unchanged rate cut is a lost opportunity for the real estate sector as a reduction in rates might have improved the market scenario and triggered the demand and sales process. Still, in the longer run we foresee enough room for rate cuts which would spur growth in the realty market. The real estate sector being a major contributor to India’s GDP needs enough backing from the RBI to give out positive signals further.”

Sudhanshu Agarwal, Director, KV Developers: “To everyone’s surprise, the apex bank has maintained the status quo which will serve as a boon for the realty sector in particular, as we are just days away from the beginning of the final festive season for this year. A no change in the repo rate by RBI will help the banks to keep the home loan rates unchanged, thus signalling the buyers to make their home purchases without additional burden on the pockets in the form of EMIs.”

Amit Wadhwani, MD, Sai Estate Consultant Chembur Pvt Ltd, “The RBI decision to keep the repo rate unchanged has given a major relief to consumers and real estate players. The commencement of the festive season is another factor that will boost the consumer sentiment. There may be a hike in the repo rate in the near future as the US Fed is likely to hike their interest rates in December. Once that happens, home loan interest rates may go up again. However, it may be a good time to buy a house as property prices are currently low.”

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