What Does RBI’s Stance On Repo Rate Mean For Realty?

Mumbai: The Reserve Bank of India (RBI) announced its fifth bi-monthly monetary policy for FY25 today, December 6, 2024. The Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, has once again decided to keep the benchmark repo rate unchanged at 6.5 per cent. This marks the eleventh consecutive meeting with no change, as the central bank maintains a neutral stance amidst global uncertainties and domestic inflationary pressures.

The decision to hold the repo rate at 6.5 per cent brings mixed sentiments for the real estate sector. While the unchanged rates ensure stability in borrowing costs for developers and homebuyers, the lack of a rate reduction means that existing home loan borrowers will continue to pay high Equated Monthly Installments (EMIs). The rate hold also dampens hopes of increased affordability, which could have spurred greater housing demand.

However, developers remain optimistic about the sector’s growth, supported by government initiatives and the continued momentum in urbanization and infrastructure development. Experts point out that the current repo rate levels have already encouraged significant real estate investments, especially in the residential segment. Bizz Buzz interacted with various players active on the real estate space to understand this.

Samyak Jain, Director, Siddha Group says, “The Indian economy has been resilient given the current geopolitical landscape and rising inflation across global markets.”

This move will usher in growth and maintain economic stability whilst enhancing consumer purchasing power, making it easier for individuals to invest in long-term assets like homes. For first-time homebuyers, this is an opportune time to take advantage of favorable borrowing conditions and secure their dream homes at more competitive rates. Govind Krishnan Muthukumar, Managing Director & Co-Founder, Tridhaatu Realty says, "The RBI’s focus on balancing inflation and growth resonates well with the real estate sector's goals. Stable borrowing costs will help developers cater to the growing demand for sustainable and climate-resilient housing.”

This policy is a positive step toward fostering investor and homebuyer confidence.

Vedanshu Kedia - Director, Prescon Group says, “The RBI’s balanced approach ensures that homebuyers remain confident, especially in the premium housing segment. This continuity is crucial for maintaining liquidity in the market and supporting long-term projects.”

Collaborative efforts from policymakers and the banking sector can further strengthen this positive trajectory.

Abhishek Jain, COO, Satellite Developers Private Limited (SDPL) says, “This prudent move will effectively control inflation while simultaneously fostering economic growth.”

By putting more money in the hands of consumers, it is expected to encourage homeownership and boost demand in the real estate sector.