No change in repo rate by RBI to provide stability to the real estate sector

Bengaluru: Status quo maintained by the Reserve Bank of India in terms of repo rate will help the real estate industry on the back of stable interest rates for both home buyers and developers. Industry participants said that no change in the interest rate will support sales of residential properties.

“The decision to keep policy rates unchanged is particularly beneficial for the real estate sector, as stable interest rates mean that borrowing costs for homebuyers and developers remain constant, encouraging further investments in property. This stability will foster confidence among potential homebuyers, and support ongoing residential sales momentum and boost housing demand, contributing to the sector’s growth,” Shishir Baijal, Chairman and Managing Director of real estate consultancy firm, Knight Frank India said.

In the bi-monthly monetary policy review, the RBI on Thursday maintained the policy repo rate at 6.5 per cent owing to inflationary pressures seen in recent months. “As expected, the RBI has once again kept the repo rate unchanged which implies that there will be no immediate effect on home loan EMIs. The decision fosters consumer confidence and offers a sense of continuity and predictability to the real estate sector, which is already witnessing a strong demand from end-users. The decision will keep the ongoing sales momentum on track and boost the optimistic attitude currently prevailing in the market. With the economy looking positive, there is no hesitation among the homebuyers to invest in residential real estate for long-term returns,” Ramani Sastri, Chairman and MD, Sterling Developers said.

He also said that this stability has a direct impact on the growth of the real estate sector, which in turn contributes significantly towards India's GDP and future growth prospects.

“As repo rate plays a crucial role in determining home loan interest rates, hence, in this context, a rate cut in the near future would serve as a big boost to homebuyer sentiment and enable better affordability,” he added.