25bps Cut Will Have Little Impact On Realty: Credai

While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC (monetary policy committee) meeting will provide stronger impetus to overall demand -- Boman Irani, Credai National President

New Delhi: Realtors’ apex body Credai on Friday said the RBI’s decision to cut benchmark lending rate by 25 basis points might have “limited direct impact” on the sector and sought further reduction in the next monetary policy meet for “stronger impetus” to housing demand. Another association Naredco welcomed the RBI’s decision, saying it could lead to lowering of interest rates on home loans, which in turn will boost housing sales.

The RBI on Friday slashed the repo rate by 25 basis points to 6.25 per cent. This was the first reduction since May 2020 and the first revision after two-and-a-half years. Credai National President Boman Irani said, “The RBI’s decision to reduce repo rate supplements recent announcements in the Budget aimed at boosting spending and spur economic growth.”

“While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC (monetary policy committee) meeting will provide stronger impetus to overall demand, accelerating housing sales, particularly in the mid-income and affordable segments,” Irani observed.

Naredco National President G Hari Babu said the rate cut will have a positive impact on the real estate sector, making home loans more affordable and increasing demand for housing. “With lower interest rates, we expect to see increased sales, improved liquidity, and a reduction in the inventory of unsold homes. This, in turn, will encourage developers to launch new projects,” he added.

Prashant Sharma, President of Naredco-Maharashtra, said, “We expect banks to ensure swift transmission of the reduced rates to borrowers, allowing a direct impact on home loan interest rates.”

Among developers, Tata Realty and Infrastructure MD and CEO Sanjay Dutt said, “The RBI’s decision to cut the repo rate is a welcome move that stands to make home loans more affordable, thus easing the financial burden on aspiring homeowners.”

While the realty sector has been witnessing a robust demand and positive sentiment for premium and luxury housing, the rate cut will immensely benefit the affordable housing segment, especially in Tier 2 and 3 cities, he added.

Venkatesh Gopalakrishnan, Managing Director of Shapoorji Pallonji Real Estate, said, “This thoughtful step highlights the Central bank’s commitment to bolstering economic growth while fostering a favourable environment for investors and homebuyers.” For the realty sector, he said this development is a significant boost, particularly for affordable and mid-segment housing.