India's housing market will continue to witness higher sales velocity with the RBI keeping key interest rate unchanged, real estate industry experts said while hoping for a repo rate cut in the next round of monetary policy to boost growth.
The Reserve Bank of India (RBI) on Thursday decided to keep the repo rate unchanged at 6.5 per cent.
Commenting on the development, realtors' body CREDAI National President Boman Irani said, "... We expect both housing supply and demand to sustain its ongoing momentum."
"However, given that the inflation is at an 18-month low, there is scope for the RBI to reduce repo rates in the upcoming MPC meetings, to stimulate growth across all industries," Irani added.
Real estate industry body Naredco's President Rajan Bandelkar hailed the RBI move, saying it will help the housing sector that has been performing well from the past two years. Nonetheless, he said, adding the sector needs announcements that could further fuel the growth.
With the festive season in tailwinds, Naredco Vice Chairman Niranjan Hiranandani said a hiatus in interest rate hike would boost sales velocity.
India's residential market is witnessing a strong revival after the second wave of the COVID pandemic that hit the country during April-June period of 2021. All listed and some large unlisted real estate firms have reported robust sales bookings during the last two financial years.
Real estate consultant Anarock Chairman Anuj Puri said, "the unchanged repo rate can help maintain the momentum in housing sales, which has so far been firing on all cylinders in 2023."
Housing sales in January-March 2023 breached the one lakh mark and stood at 1.14 lakh units across the top seven cities, he added.
Tata Realty & Infrastructure MD and CEO Sanjay Dutt said the move will encourage prospective homebuyers.
"... It also provides an opportune time for individuals and developers to raise home loans, construction finance cheaper and Lease Rent Discounting (LRD) respectively at lower than current interest rates, further propelling the growth of the real estate sector," Dutt said.
Venkatesh Gopalkrishnan, Director Group Promoter's Office and CEO, Shapoorji Pallonji Real Estate, said the unchanged repo rate provides a sense of certainty to developers and homebuyers alike, instilling faith in the real estate market.
Signature Global, which is into affordable housing, Chairman Pradeep Aggarwal said this demonstrates a positive intent towards supporting the housing market.
Realty firm Omaxe Ltd Director-Finance Atul Banshal hoped that the RBI would opt for a policy rate reduction in the next review meeting.
Gaurs Group CMD Manoj Gaur said this would surely be a relief for the real estate sector which is seeing a great upturn in the last 5-6 months.
"However, we look forward to lowering of the repo rate in the months to come which will boost the real estate sector and as well as the country's economy," Gaur said.
Amit Modi, Director of County Group, said, the high interest rate has not impacted mid-income and luxury housing but acted as a dampener in the case of affordable housing. "We hope that the RBI lowers the repo in the next meeting."
Among other consultants, Proptech firm Housing.com Group CEO Dhruv Agarwala said this augurs particularly well for the real estate sector as home loan interest rates would remain at the current level.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "The continuation of the status quo on the monetary policy, after a substantial decline in inflation in April, signals sustained support for growth amidst a persistent need for caution."
Knight Frank India CMD Shishir Baijal said, "We believe that this status quo will facilitate positive decision-making for homebuyers."
"... The pause in rate hikes will instil a sense of optimism among borrowers and we expect the housing sales momentum to continue," India Sotheby's International Realty MD Amit Goyal said.
Piyush Bothra, Co-founder and CFO, Square Yards, said, this affirms the view that interest rates will only now have one direction which is downwards.
"This is a big positive for the home buyer as they know that their EMIs down the line will only decrease further. A lot of fence sitters are expected to jump in, and the developers are likely to cash in on this pent-up demand," he said.
Bengaluru-based Sterling Developers CMD Ramani Sastri described it as a positive development for home buyers and investors, saying this will reduce uncertainty and volatility associated with interest rate fluctuations.
Property brokerage firm Inframantra founder Shiwang Suraj said homebuyers, both existing and prospective, would be relieved for the time being as interest rates on home loans would remain steady.
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