Realtors See Strong Housing Demand; Hope For Rate Cut Next Yr

We hope to see the RBI and the government continue to leverage the robust growth and potential offered by real estate and agriculture sectors in particular, via a combination of policy interventions and reduced rates to form a conducive eco-system for sustained and sustainable economic growth -- Boman Irani, Credai President

New Delhi: Realtors industry bodies Credai and Naredco expect the RBI to reduce key interest rate in its next monetary policy to boost housing demand, which they said will remain strong with the stability of interest rates on home loans.

The Reserve Bank of India kept its key interest rate unchanged citing inflation risks, but cut the Cash Reserve Ratio that banks are required to park with the central bank, boosting money with lenders to support a slowing economy.

Realtors' apex body Credai President Boman Irani said the RBI move reflects an understandable approach towards striking a balance between economic and price stability. "However, going ahead into the new year, we hope to see the RBI and the government continue to leverage the robust growth and potential offered by real estate and agriculture sectors in particular, via a combination of policy interventions and reduced rates to form a conducive eco-system for sustained and sustainable economic growth," he added.

Naredco President G Hari Babu described it as a balanced approach to sustain economic stability while fostering liquidity. "The unchanged repo rate ensures continued affordability for homebuyers and stability in lending rates, both critical factors in sustaining the demand momentum witnessed in residential and commercial real estate.

The reduction in CRR is a welcome step, as it releases additional liquidity into the banking system, providing financial institutions with greater flexibility to offer loans at competitive rates," he added. Hari Babu hoped that the RBI would consider reducing repo rates in its next policy to give a greater impetus to affordable housing.

Among developers, Gaurs Group CMD Manoj Gaur said the housing market is doing good and this move will definitely keep the bull run continue in the real estate sector. Mohit Malhotra, Founder & CEO of NeoLiv, said this continued stability in interest rates will make owning a dream home possible. Ramani Sastri, Chairman & MD of Sterling Developers, said, "While a rate cut would have been favourable for the real estate sector, unchanged home loan rates will also help sustain buyer interest and preserve the positive sales momentum that we have seen in the recent past, enabling more homebuyers to realize their dreams."

Going forward, he said the RBI should consider reducing rates as it will further boost investment in the real estate sector. Real estate consultant Ananrock Chairman Anuj Puri said "A repo cut in repo rate would have definitely helped boost housing sales momentum further, particularly since we have seen sales tapering in the last two quarters.

However, the continuation of relatively affordable home loan interest rates will attract borrowers from this segment, especially since housing prices saw a significant rise in the last quarter." Dhruv Agarwala, Group CEO of Housing.com and Proptiger, said, "With housing affordability under pressure due to rising property prices, a rate cut could have boosted the real estate sector, particularly amidst slowing urban demand and moderation in wage growth." However, housing demand remains strong, especially in the high-end and luxury segments, he added.

Ashwin Chadha, CEO of India Sotheby's International Realty, said this stability ensures unchanged mortgage rates and supports the robust housing demand, particularly in the premium and luxury segments. Samir Jasuja, Founder & CEO of data analytic firm PropEquity, said the cut in CRR by the RBI today will shore up the liquidity in the economy and help developers borrow more as there is an unlimited requirement for funds in this sector.