The Reserve Bank of India, in its monetary policy review meeting held on Thursday, decided to maintain the repo rate at the same level for the ninth consecutive occasion, demonstrating a careful equilibrium between managing inflation and fostering economic growth.

Industry experts indicated that this action corresponds with the prevailing inflation forecast, with the objective of preserving macroeconomic stability and ensuring price stability.

“Nevertheless, we expect a possible change in the Reserve Bank of India’s position during the policy meeting in October, with potential interest rate reductions beginning in December,” said Dhruv Agarwala, Group CEO, Housing.com & Proptiger.com.

In the meantime, stable home loan interest rates continue to support robust demand in India’s housing sector. This stability makes borrowing more affordable for potential homebuyers, encouraging real estate investment and contributing significantly to economic growth.

“Looking ahead, favourable borrowing conditions and ongoing urbanisation position the real estate sector for sustained growth. We are optimistic that this policy stability will boost consumer confidence and investment activity in the housing market,” Agarwala added.

Also Read: RBI keeps repo rate unchanged at 6.5% – How can homebuyers reduce their interest burden?

Anuj Puri, Chairman, ANAROCK Group, said the RBI’s decision to keep the repo rate unchanged at 6.5% for the ninth consecutive time aligns well with yesterday’s announcement on indexation benefits.

“It sets a positive tone for the housing industry. Maintaining interest rates offers consistency in borrowing costs, which will prompt more aspiring homebuyers to consider taking the plunge – and thus drive demand in the housing market. With interest rates staying steady, EMIs will remain manageable for current and potential homeowners, potentially leading to increased home sales – particularly in the price-sensitive affordable segment,” he said.

“The stable repo rate is expected to boost confidence among real estate stakeholders, particularly for consumers and investors. This is likely to boost housing sales velocity, especially during the upcoming festive season, which is considered auspicious for buying homes. This will also help maintain the sector’s attractiveness for institutional funding. Noteworthily, a higher probability of interest rate cut by US Federal Reserve in the upcoming meeting may influence the RBI’s stance on Indian repo rates in short to medium term,” said Anurag Mathur, CEO, Savills India.

Shrinivas Rao, FRICS, CEO, Vestian, said, “RBI maintained status quo for the ninth consecutive time and kept the repo rate at 6.5%. Sticky inflation, elevated food prices, and global macroeconomic uncertainty likely influenced this decision. A steady monetary policy for the past one-and-a-half years has ensured stability in the real estate sector, boosting demand for all asset classes. This upward momentum is expected to continue as the repo rate is anticipated to remain stable for a couple of more months due to rising inflation amid increasing geopolitical frictions in the Middle East.”

Saket Dalmia, President of India Sotheby’s International Realty, observed that while the near-term outlook for global growth appears positive, the medium-term outlook faces challenges due to demographic shifts, climate change, geopolitical tensions, and fragmentations. Despite this, domestic economic activity remains resilient.

“The MPC emphasized the need to maintain a disinflationary stance to ensure inflation aligns with targets while supporting growth, thus keeping the policy rates unchanged. Stable interest rates are beneficial for various industries, especially real estate. We support the RBI’s current stance and anticipate future rate cuts, which would positively impact the real estate sector and contribute to overall economic stability and growth,” he added.

Stability in interest rates coupled with the recent announcement to rationalize stamp duty charges along with concessions for women homebuyers bodes well for real estate sector especially residential segment. Strong visibility in financing charges should help homebuyers and developers alike in the upcoming festive season.

Moreover, “partial withdrawal of the applicability of the revised LTCG tax arising out of sale of land & buildings retrospectively provides elbowroom to effect housing sales with minimal tax outgo. This is likely to buoy investors’ & homeowners’ sentiment and thus the real estate sector at large throughout 2024,” observed Vimal Nadar, Senior Director & Head, Research at Colliers India.