Realtors heave sigh of relief as RBI keeps repo rate unchanged; to boost housing sales

The RBI decision to keep repo rate unchanged comes as a welcome respite for homebuyers and will boost housing demand especially for affordable and mid-income category, according to property developers and consultants.

After raising the interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept the benchmark rate unchanged as global banking woes added uncertainty to the economic outlook.

"RBI's decision to maintain the repo rate has been received well by the Indian real estate industry as it will not only accelerate housing demand and supply but also supplement sectoral growth overall," realtors' apex industry body CREDAI National President Harsh Vardhan Patodia said.

This move will especially provide an impetus to affordable housing, he added.

Another major association NAREDCO President Rajan Bandelkar said the RBI has provided a much-needed boost to the sector, which is already witnessing a positive momentum.

"This decision offers stability and certainty to developers, investors and homebuyers, and can further stimulate demand for housing loans," he said.

Naredco National Vice Chairman Niranjan Hiranandani said, "This act of relief will restore confidence in homebuyers' sentiment and boost demand rally in the real estate."

Naredco Maharashtra President Sandeep Runwal said the RBI move will positively impact the rate sensitive segments of affordable and low-income group housing.

According to reports by real estate consultants, housing sales rose during January-March 2023 compared with the year-ago period. Premium housing performed well. Housing sales have been on upswing after the second wave of the COVID pandemic, despite rise in prices and hardening of mortgage rates.

Commenting on the RBI policy, Venkatesh Gopalakrishnan, CEO of Shapoorji Pallonji Real Estate, said, the decision will provide stability in the home loan category and keep the EMIs unchanged. "It will maintain the buying sentiment in the real estate sector and may lead to an upsurge in the mid-segment housing category."

CREDAI-NCR President Manoj Gaur noted that the consecutive hikes in repo rate was creating a negative impact on potential buyers, while Amit Modi, President CREDAI (Western Uttar Pradesh), said the recent increases had, in some way, put investors in a bind and added that the pause would boost sales.

Realty firm Omaxe Director Finance Atul Banshal said it is a supportive move of RBI for rate-sensitive businesses. "Despite the rate hikes in the past, the housing segment has successfully maintained demand momentum across price points."

Luxury homes developer Krisumi Corporation MD Mohit Jain said the RBI's decision will prevent any further increase in home loan rates. "The higher interest rate on home loans has started pinching borrowers, as it negatively impacts loan eligibility of home buyers," Jain said.

Among property consultants, Anarock Chairman Anuj Puri said the RBI's decision comes as a welcome respite to homebuyers.

"It bears keeping in mind that after the remarkable performance in Q1 2023, the housing market is now staring at major headwinds with layoffs, rising property prices, etc. which will pose a challenge in the short-term. The respite of home loan rates remaining unchanged is therefore very welcome," Puri said.

Amit Goyal, CEO, India Sotheby's International Realty, said rising home loan interest rates has become a growing concern for both home buyers and supply-side stakeholders.

To some extent the higher home loan interest rates have dampened the demand for affordable and mid-segment housing as buyers in these segments are more price-sensitive. While the luxury and high-end segments have not been significantly impacted yet, further increases could have affected the overall industry.

Knight Frank India CMD Shishir Baijal said the RBI's decision to pause its rate hike cycle is supportive of economic growth.

"From a real estate market perspective, the sector has weathered multiple home loan interest rate increases from a low of 6.5 per cent to 8.75 per cent, supported by favourable house purchase affordability and the strong desire towards home ownership. Therefore, a pause in any further rise in the lending rates should support the existing growth momentum in the housing sector," he said.

Anshuman Magazine, Chairman & CEO- India, South-East Asia, Middle East & Africa, CBRE, said the RBI's decision to keep the repo rate stable was a surprise move but has been done with the view of the withdrawal of accommodation while keeping a close eye on inflation.

The move is highly encouraging for the infrastructure, housing, and other real estate segments as this decision, for now, allays fears of a further increase in financial burden on developers and borrowers, he said.

With this balancing act of RBI, affordability of home-ownership is expected to remain intact, said Anurag Mathur, CEO, Savills India.

Samantak Das, Chief Economist and Head  Research, JLL India, said: "Given that the affordability synergy was under challenge with home loan EMIs rising by 15-17 per cent from April 2022 and home prices also increasing during the same period by 4-12 per cent, the current status quo in policy rate will provide some respite. This should positively support the current home-buying sentiment."

Colliers India Head of Research Vimal Nadar said the unchanged repo rate is likely to give some breather to homebuyers as the RBI has raised the repo rate by a cumulative 250 basis points since May 2022, thereby pushing up interest rates for homebuyers to 9.5 per cent and above.

Delhi-based housing brokerage firm M-Sanvi Real Estate founder Mukesh Kumar said the RBI move will boost sales of apartments and builder floors in the national capital. 

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