RBI’s status quo on repo rate set to benefit realty sector

Mumbai Reserve Bank of India (RBI) Governor Shaktikanta Das announced on June 8 that its Monetary Policy Committee meeting has decided to keep the key policy repo rate unchanged at 6.5 per cent. The announcement could have a positive impact on consumer sentiment, benefiting the interest-sensitive real estate sector.

It is despite the fact that a reduction in the repo rates would further help improve home buyer sentiments and fuel home sales. It would put more money in the hands of the home buyer encouraging him to go ahead and make a home buying decision.

However, RBI has been successful in containing inflation rate within permissible limits. The Indian economy is resilient to global headwinds and has fared remarkably well. The government has initiated a slew of positive policy measures which have sustained housing sales.

Bizz Buzz interacted with quite a few Mumbai-based realtors to know about it.

Sandeep Runwal, president, Naredco Maharashtra, said: “This in addition to the government’s decision to not raise the Ready Reckoner (RR) rates in the State for 2023-24, did boost homebuyers' sentiments. We once again urge the government to relax stamp duty rates which will fuel interest in home buyers. We hope that these positive developments will keep the homebuyers encouraged to come forward and buy their dream home."

The RBIs decision to keep the repo rate unchanged at 6.50 per cent is a good move which has curbed inflation levels to acceptable limits. This is the second consecutive pause in repo rate hike which will definitely improve market sentiments, propelling housing demand.

Pritam Chivukula, Vice President, Credai-MCHI and Co-Founder & Director, Tridhaatu Realty, said, “We are seeing a buoyant housing sector where home buyers are coming forward to buy property. This reflects a healthy outlook for the sector, and we can expect the government to continue with industry friendly policies that will sustain housing sales. We hope that the State Government steps in to lighten the homebuyer’s load by reducing stamp duty to further boost home buyer sentiments and boost home sales."

This decision reflects their commitment to stability and proactive economic management. It is particularly beneficial for the real estate sector, as lower home loan rates will drive growth and encourage property investment. The availability of attractive financing options due to low-interest rates makes it easier for potential buyers to purchase homes, stimulating the market. Existing homeowners burdened by past rate hikes will also find relief, he added.

Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory, said that the RBI's prudent decision-making will contribute to sustained development in the real estate sector.

The Indian economy has stood out strong and resilient against global headwinds. The RBI's decision to maintain the status quo for the second consecutive time was an expected move to focus on stability, he added.

Vivek Mohanani, Managing Director & CEO, Ekta World, said: “Another repo rate hike by the RBI would have not augured well for the real estate sector as home loan interest rates are already at a higher level. Any further increase in policy rates would have had a substantial impact on buyer sentiments and affordability, which in turn could have curtailed demand.”

A further reduction in interest rates in the near future would be preferred to bolster overall market confidence and make it more attractive for home buyers, he added.

Samyak Jain - Director, Siddha Group, said: “The decision to maintain the status quo by RBI in its key policy rates for the second time in a row was on the expected lines. This comes at a time when property prices are on the rise, adding a huge financial burden to the end consumer. The decision will unlikely have an immediate impact on homebuyers, but it does offer some stability to the real estate sector”.

This may trigger the decision of many home buyers who were actively seeking to buy their desired home. We look forward to government intervention by providing some relief to home buyers in the form of reduced stamp duty rates which will lighten their burden further, he added.

Himanshu Jain, VP - Sales, Marketing and CRM, Satellite Developers, said: " The rising property prices had already added to the woes of the homebuyers. In the wake of this, the decision of RBI to not hike the repo rate has brought a much needed relief to the homebuyers. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and this decision is likely to have a positive impact on a buyer’s decision."