Real estate developers and consultants on Friday said the RBI’s decision to keep key policy rates unchanged means low interest rate on home loans will continue but felt that further reduction could have boosted housing demand that has shown signs of recovery in the last few months.
RBI Governor Shaktikanta Das said the MPC (Monetary Policy Committee) voted unanimously to leave the policy repo rate unchanged at 4 per cent. In his statement, Das also mentioned that data for sales and new launches of residential units in major metropolitan centres reflect a renewed confidence in the real estate sector.
Housing sales were badly impacted during the April-June quarter of this fiscal year because of the lockdown to control the COVID-19 pandemic. However, sales recovered on pent-up and festive demand along with a low home loan interest rate of around 7 per cent during October-December 2020.
“Under the given market scenario and circumstance, the RBI’s direction on unchanged repo rate is very much on the anticipated lines though a rate cut would have been better to combat the negativity of pandemic-led economic crisis across the industry,” Naredco President Niranjan Hiranandani said.
Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure, welcomed the apex bank’s decision to keep policy rates unchanged for the fourth time in a row. “Maintaining this accommodative outlook is extremely crucial, especially with the green shoots of recovery being visible now”.
The RBI maintaining status quo for the fourth time in a row is a positive step towards spurring consumption, Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa of CBRE said.
Anarock Chairman Anuj Puri said the real estate industry always aspires for reduced interest rates.
“Housing demand is reviving, and this demand needs to be fostered. However, the RBI’s current stance is absolutely justified given the unique circumstances. We are certain that rates will be adjusted favourably once the pandemic exigencies ease,” he said.
Dhruv Agarwala, Group CEO, Housing.com and Proptiger, said the decision of RBI to keep the repo rate unchanged along with accommodative stance is understandable at this juncture. “Although a further cut in the key rates would have given a boost to current demand uptick that we have seen recently,” he added.
The measures announced by the RBI Governor today for liquidity enhancement in the economy is indeed a good step and was much required, he said.
Realty firm Gaurs Group MD Manoj Gaur said RBI’s decision is in line with the expectation of the markets. “The headline inflation is on a downward spiral now which gives hope that RBI will be able to bring down repo rates as the year progresses.”
Ramesh Nair, former CEO of JLL India, said the expectation from the real estate industry was deeper cuts in policy rates.
“Given that RBI has not cut rates, they should now try and ensure that the previously announced rate cuts are fully transmitted to end users and developers and also focus on increasing the quantum of overall credit available for the real estate sector,” Nair said.
Knight Frank India CMD Shishir Baijal said the decision is in line with expectations. and added that the measures on enhanced bank funding window for NBFCs will also benefit the stressed sectors including real estate. “As seen in the past few months, housing markets in the country have responded well to low home loan interest rates”.
Bengaluru-based developer Puravankara Ltd MD Ashish Puravankara said the RBI’s decision to keep the repo rate unchanged will certainly reassure home buyers looking to invest in property and will create a latent demand for homes across the country as the interest rates are at its decadal lowest.
Samantak Das, Chief Economist and Head of Research, JLL India, said the status quo on the policy rates is a welcome step for the home buyers as they can take advantage of the prevailing lowest mortgage rates.
Savills India CEO Anurag Mathur said although there was no downward revision of benchmark lending rates, the accommodative stance should be helpful for real estate as well as infrastructure.
Piyush Bothra, CFO, Square Yards, termed it as a positive decision, making sure that home loan interest rates will not harden in the coming days. “The low interest rates have started impacting the property markets in a positive way. Maintaining low home loan rates was critical for a sustainable recovery in the real estate sector.”
ABA Corp Director Amit Modi said it would have been a relief if some benefits were extended to the sector today.
Mumbai-based S Raheja Realty Director Ram Raheja said the home loan rates will continue to be at a multi-year low, hence aiding home buyers while Nahar group’s Manju Yagnik said the ongoing accommodative stance by RBI was the need of the hour to back growth while ensuring adequate liquidity in the system.
Kaushal Agarwal, Chairman of The Guardians Real Estate Advisory, said after a budget that had limited announcements for real estate, the sector was hoping against hope for a further reduction in the repo rates.
The reduction would have helped spur growth in demand for real estate that has been severely hit as a result of the pandemic and subsequent lockdowns, he added.
Investors Clinic Founder Honeyy Katiyal said this indicates that real estate loan interest rates will not increase anytime soon while hBits Founder Shiv Parekh said RBI decision shows the rate of interest for home buyers will stay steady.
hBits is into fractional ownership of commercial real estate.
Sarojini Ahuja, VP – Sales & Marketing, Transcon Developers, said RBI’s accommodative stance will help mitigate the effects of COVID-19 on businesses and will be a key to the recovery of real estate and the overall economy.
