Real Estate Sector Welcomes RBI’s Repo Rate Stance

BY Realty Plus

After the The Reserve Bank of India's MPC declared repo rates unchanged at 6.5 percent, industry experts expressed their thoughts on the same by some welcoming the move while some also talking about its negative part.

Gurmit Singh Arora, National President, Indian Plumbing Association said, “RBI has released its updated monetary policies that project inflation in FY 2023-24 and FY 2024-25. CPI inflation at 5.4per cent for FY24 with higher rates for Q3 at 5.6per cent followed by dip to 5.2 per cent for Q4. In looking ahead to FY25, the RBI expects moderation in inflation at 5.2% for Q1, 4% for Q2 and 4.7%. Such projections point to a moderated optimism which the central bank should watch over the possibility of higher inflation in other fiscal years”.

Ravi Singhal, CEO, GCL Broking, “As RBI increases GDP projection, this implies negative side of inflation. Above all target and geopolitical tension is still there. But internationally crude prices are coming down. Also, UDS bond yields are coming down now. The market will predict rate cut soon in the market. So, the market can show a rally of 20% from here in 6 months.”

Agam Gupta, Executive Director, Share India FinCap, “The real estate industry will benefit in order to maintain its present growth pace. The basic lending rate increased as a result of the latest three adjustments, which were fully approved. In actuality, 250bps were added to the repo rates, making it 160bps currently. The demand for homes has started to be impacted by it, especially in the affordable market. Over the previous several quarters, there has also been a slowdown in the growth of the middle segment. Increased REPO rates may also have a negative effect on buyer sentiment and property affordability. The impact of a shift in the MPC rate on house loans can be significant. Conversely, the commercial banks will pay more to borrow money from the RBI if the MPC raises the repo rate. This will be costly because interest rates on loans like home loans will probably increase along with the cost of funds for banks. Consequently, this implies that banks must bear increased funding costs, which drives up interest rates on all loans, including home loans.”

Dr. Dharmesh Shah, CEO, Hero Realty Pvt Ltd, “This decision is expected to have a positive impact on the real estate market, particularly in the housing sector, leading to a steady increase in property transactions. The growth trend in mid-income and premium housing transactions is likely to continue, while affordable and low-income housing, influenced by interest rates, may see a more cautious pace of activity."

Manoj Gaur, CMD Gaurs Group and President CREDAI NCR was of the view, “The market is receptive to the current 6.5% repo rate. New launches by leading developers have received enthusiastic responses; unsold inventory is at an all-time low, and demand for premium and luxury projects has reached unprecedented levels. 2023 has been a spectacular year for the real estate sector. RBI keeping the repo rate unchanged for the seventh consecutive time signals stability will benefit the sector.”

Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd expressed, “The consecutive decision to pause the repo rate hike, since February of this year, is a positive development for both borrowers and real estate developers. The stable borrowing rates will be advantageous for potential homebuyers, fostering increased demand. This uptick in demand is expected to catalyze growth in the real estate sector, ultimately making a valuable contribution to the country's GDP.”

Tags : Gurmit Singh Arora Pradeep Aggarwal Manoj Gaur Agam Gupta Ravi Singhal Reserve Bank of India's MPC