Real Estate Sector Expected to Benefit From Unchanged Repo Rates

Real estate sector expected to benefit from unchanged repo rates

The RBI (Reserve Bank of India) has declared that the repo rate will remain the same at 6.5% for the eighth time in succession. The Indian real estate industry has positively welcomed this latest decision, with most players claiming that it will boost the sector’s growth prospects in the near future.

Many industry experts have opined that while core inflation has come down steadily over 11 months, the Monetary Policy Committee (MPC) of the RBI has focused on its withdrawal of accommodation approach towards progressively aligning inflation targets with economic growth. The GDP for FY25 is already forecasted at 7.25% with an above-average monsoon and better performance of the manufacturing sector playing catalysts. Inflation is expected to touch 4.5% for FY25, although food price volatility is still a challenge.

The RBI’s decision can thus instill higher confidence among consumers, particularly in sectors like housing which are seeing robust demand throughout all major Indian cities. Some experts feel that stable interest rates will continue to keep home loans more affordable and accessible, thereby enabling an expansion of the housing market. Some have also stated that the decision is welcome, balancing economic stability and high food inflation. They also feel that with declining inflation, 25-50 basis point rate cuts in H2 of the fiscal may be witnessed. These may also boost the realty sector further, which is already seeing high end-user demand.

A few experts have also highlighted the need to focus on the affordable housing sector, even though the real estate industry will welcome the unchanged repo rates with its all-time boom and all-time low unsold inventory levels.

The CFO and Co-Founder, Square Yards, Piyush Bothra, states that interest rates have a major impact on the sentiments of consumers, especially affecting most buyers in the low-to-mid category. The present upcycle, according to him, is majorly driven by the premium housing category which is not as sensitive to minor fluctuations in interest rates. Hence, he opines that the stance of the RBI to keep the rates unchanged is slightly disappointing, because a benchmark rate reduction would have boosted the realty market, particularly in the low-to-mid category. It would have also helped more first-time buyers fulfill their home-ownership dreams.

Yet, he also opined that the country is geared towards a more positive macroeconomic scenario that may boost home buying sentiments steadily in the long run. He also states that the demand momentum, however, should remain robust throughout all major Indian cities, going by the present outlook.

For a detailed report on this read the articles we were featured in:

The Financial Express – https://bit.ly/3wYMTsD
Realty+ – https://bit.ly/3XcsmLG
GoodReturns.in – https://bit.ly/4efovDO
Dainik Jagran – https://bit.ly/3xjT7TM

Published Date: 7 June, 2024

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