In a bid to tame inflation and sustain economic growth, the Reserve Bank of India (RBI) on Friday decided to keep the repo rate unchaged at 6.5% for the fifth time in a row, which is good news for both homebuyers and real estate.
According to industry experts, this is an extension of the festive bonanza that the RBI gave to the homebuyers in its last policy announcement. It gives homebuyers yet another opportunity to make cost-optimized home purchases.
Commenting on the MPC announcemnet, Anuj Puri, Chairman, ANAROCK Group, said, “If we consider the present trends, the housing market is on a bull run and unchanged home loan rates will only add to the overall positive consumer sentiments. Additionally, given that housing prices have escalated across the top 7 cities in the last one year, at least the unchanged home loan rates will give some relief to the homebuyers.”
As per ANAROCK Research, average housing prices have increased anywhere between 8% and 18% across the top 7 cities in the last one year with Hyderabad recording the highest 18% jump. The current average prices in the top 7 cities stand at approx. Rs 6,800 per sq ft while in 2022 they stood at nearly Rs 6,105 per sq ft, thus increasing by 11% collectively in the top 7 cities.
“Going forward, we may expect the momentum in housing sales to continue in the wake of the unchanged repo rates coupled with the resultant stable home loan rates and positive economic outlook on India,” added Puri.
Also Read: RBI holds key policy rates: How it will impact exiting and new home loan borrowers
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “Steady policy interest rates and maintained policy stance was widely expected and aligns with the trajectory of key global central banks. The undertone, however, remains precautionary over inflation risks in the upcoming months due to seasonal volatility in food prices. The decision will continue to support the existing momentum of residential real estate demand in India. Despite the escalations in the borrowing costs, the overall housing market has continued to remain upbeat; however, the momentum in the affordable segment has lagged. Thus, a pause is supportive of catering to the housing needs of the vulnerable segment.”
The RBI move is most likely to give a boost to home buying in the near future by increasing consumer confidence.
“The RBI, as expected, has kept the policy rates unchanged along with an optimistic growth forecast for the country, indicating the rate hike cycle has concluded, provided inflation remains in control. This will increase consumer confidence and boost home buying in the coming quarters. We also welcome a unified regulatory framework on connected lending for all regulated entities which will bring transparency and increased trust on digital lending, boosting the sector’s growth while protecting borrowers’ interests. An increase in the e-mandate limit suggests that India is moving towards an increased acceptance of digital payments across sectors,” observed Madhusudan Sharma, Executive Director, Bharat Housing Network, a housing credit platform and infrastructure for affordable housing.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “The pause on the interest rate is expected to push sentiments further for home buyers, and this continued pause in rates is likely to boost the real estate sector significantly. Expected inflation within the comfortable range will further rekindle the hope of a declining rates regime.”
Property consultants are of the view that the housing sector, particularly the luxury segment, will continue to thrive in the current environment.
Ashwin Chadha, CEO, India Sotheby’s International Realty, said, “The Reserve Bank of India’s decision to maintain unchanged interest rates reflects a cautious approach aimed at stabilizing inflation within the targeted band of 2%-6%. Notably, the RBI governor mentioned a balanced risk outlook, and the projection for Real GDP growth stands at 7% for the current fiscal year, with an anticipated range of 6.4% to 6.9% for the next year. Given these positive and strong economic indicators, the probability of a rate hike in the upcoming MPC review meeting appears negligible. We anticipated that the housing sector, particularly the luxury segment, will continue to thrive amid a well-performing economy and growing purchasing power of the citizens of the country.”