RBI Monetary Policy Decision: The demand for the real estate sector has surged in the past few years. The sector is poised to play a significant role in the economic growth of the country.
Good news for homebuyers! The Reserve Bank of India (RBI) has left the interest rates unchanged for the eighth consecutive time in a row. Announcing the second bi-monthly monetary policy for the fiscal year 2024-25, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 6.5 per cent. The move is to balance pushing for economic growth and keeping inflation in check.
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The demand for the real estate sector has surged in the past few years. The sector is poised to play a significant role in the economic growth of the country. As the central bank has decided to keep the repo rate the same, this will give a big boost to the growth trajectory of the realty sector and property market. It will continue to present EMI-dependent buyers to fulfill their home-ownership aspirations. This will also prove to be beneficial for potential homebuyers by ensuring affordability and sustaining momentum in the housing market.
What is a Repo Rate?
The repo rate is the interest rate at which the RBI gives short-term loans to banks to enable them to meet their liquidity requirements. This in turn has an impact on the cost of loans that banks extend to corporates and consumers.
RBI Keeps Repo Rate Unchanged Since February 2023
The central bank has kept the repo rate unchanged since February 2023. At that very time, the RBI hiked the repo rate to 6.5 per cent. It raised rated by 2.5 per cent between May 2022 and February 2023 after which they have been kept on hold.
RBI MPC June 2024, Real Estate News: Experts Speak
“For the average homebuyer or developer, this is a good news. It implies that borrowing costs will stay relatively affordable, potentially prompting more individuals to consider property investment. Moreover, with core inflation easing and fuel prices decreasing, consumers may find themselves with extra funds to allocate towards a down payment or home enhancement venture,” G Hari Babu, National President of NAREDCO, said.
Commenting on the development, Manju Yagnik, vice chairperson of Nhar Group and senior vice president of NAREDCO Maharashtra, said, “This stability will support the real estate market, making housing more affordable and boosting consumer confidence. It will enable informed investment decisions, promoting sector growth and contributing to India’s economic prosperity.”
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd. said, “Economists predict that if inflation continues to decline, rate cuts of 25-50 basis points could be expected in the second half of the fiscal year. Such a reduction in interest rates could significantly boost the real estate sector, which is already benefiting from strong end-user demand. We anticipate this robust demand trend to remain healthy over the coming years, particularly in cities like Gurugram, which are experiencing substantial infrastructure development.”
SK Narvar, Group Chairman, Trident Realty said, “The RBI’s decision to maintain the status quo will ensure that the sector continues to benefit from these favorable conditions, driving growth and creating new opportunities for homebuyers and investors alike.
Anil Gupta, President of CREDAI NCR Bhiwadi Neemrana said, “This stability in interest rates will make homes more affordable for potential buyers, potentially elevating the existing upward trajectory of the housing market. Additionally, lower borrowing costs could encourage industrial investment. A reduction in unsold inventories, coupled with stable interest rates, could help sustain buyer demand. We welcome this move and believe it can contribute to a flourishing real estate sector and a stronger Indian economy.”
Ashish Agarwal, Director, AU Real Estate said, “This stability in interest rates will make homeownership more attainable and affordable for buyers, which in turn will drive demand for luxury housing. As India’s economy continues its upward trajectory, the real estate sector is poised to play a pivotal role, and this repo rate policy will be a crucial catalyst in propelling that growth forward.
Pankaj Pal, Managing Director, Whiteland Corporation said, “This decision establishes a strong basis for long-term stability in the housing sector, which will enhance the positive outlook prevailing in the market. The real estate industry is buoyant give traction to India’s journey to become the third largest economy in the future.”
Santosh Agarwal, CFO and Executive Director said, “Developers will benefit from stable borrowing costs, enabling efficient project completion and a steady supply of residential and commercial spaces. Going forward, we plan to expand our projects to meet the rising demand. The current monetary policy and economic growth create favourable conditions for ongoing development in construction and real estate, aligning with our goal of providing high-quality spaces that meet customer requirements.”
Abhishek Trehan, Executive Director, Trehan Iris, says, “This move aims to bolster the sector’s momentum, potentially increasing demand for housing, especially luxury properties. As India’s economy continues to grow, the real estate sector is positioned to have a significant impact on the country’s development, and the RBI’s repo rate policy will play a crucial role in driving that growth forward.”
Yashank Wason, Managing Director, Royal Green Realty says, “This move will keep the momentum of real estate going on. Housing sales across the country, including Delhi NCR, have been phenomenal in the last few quarters. The unchanged repo rate will boost the confidence of homebuyers to purchase properties and give breathers to home loan borrowers. The consistent stand of RBI will give stability to the real estate sector and its growth will significantly add traction to the country’s growing GDP and promising future prospects.”
Sanjay Kumar Sinha, Founder and Managing Director, Chaitanya Projects Consultancy, said, “This move will foster the confidence of Infrastructure, EPC (engineering, procurement, and construction) and real estate companies, which are primarily dependent on debt. Further, it indicates a stable economic environment, which can attract more private investment into infrastructure & continued support from the government.”
“This move will especially benefit the luxury housing segment, where demand for exclusive high-end properties is set to soar, driving growth not only in metro cities but also in emerging luxury markets across India”, said Varun Sharma, Founder & MD, MVN Group.
Rajat Khandelwal, Group CEO, Tribeca Developers. “With interest rates remaining stable, home loans will continue to remain accessible and affordable, allowing the market to expand further. This development is expected to create more confidence among buyers and trigger positive trends in home buying. As a result, it is expected to stimulate additional property investment, boosting its growth and strengthening the Indian economic landscape.”
Dharmendra Raichura, Ashar Group said, “Although the unchanged rate is industry-agnostic, the real estate sector anticipates lower interest rates later this year, which could provide an impetus for housing demand and sectoral growth across industries. With India’s GDP expanding robustly at 8.4% in Q3 of FY 2023/24, a future rate cut could sustain or accelerate this momentum. Developers and investors can capitalize on the conducive environment, as the residential segment is currently experiencing a bull run, with sales rising to over 74,000 units in Q1 2024. We can further expect a cut of 0.25-0.50% in H2 of FY 2024-25.”
“As a real estate developer, we understand the RBI’s cautious approach in maintaining the status quo on interest rates amidst the current political dynamics. While we were hopeful for a rate cut to stimulate market activity, we acknowledge the importance of a stable economic environment,” said Ravi Saund, Founding Director, of Empirium Private Limited.
Vipin Sharma, Founder & Chairman, Aarize Group said, “We believe that India’s growth at 8.2% in FY 2023-24 is an outcome of the initiatives made for Viksit Bharat by 2047; the growth trajectory is predicted to continue and strengthen in the future. This stability in loan rates promotes current and future real estate investments, hence improving sector growth. Therefore, we are committed to use this growth boost to meet the increasing demand for residential and commercial spaces.”
Sandeep Chillar, Founder & Chairman of Landmark Group – The real estate sector is on an upward growth trajectory and the stability in the repo rate will give a fillip to the steady growth while adapting to broader economic conditions and policy directions. By aiming to balance financial stability and economic development, the cautious decision to keep the repo rate unchanged at 6.5% is likely to help the real estate sector maintain its growth momentum, leading to healthy sales in the coming quarter.
Vikas Aggarwal, COO for Worldwide Realty said, “This decision underscores our sector’s need for adaptive strategies, aligning our plans with the broader economic landscape. Developers like us must remain agile, leveraging opportunities while navigating potential challenges. Overall, the RBI’s decision sets the stage for informed decision-making, and we’re prepared to adjust our strategies accordingly to thrive in the evolving real estate market.”
Source : ET News
