Realty Sector Terms RBI’s Repo Rate Hike Reformative & Balanced Approach

BY Realty Plus

Commenting on the RBI MPC’s move, Dr Niranjan Hiranandani said, "Taming steep inflation hike is a preordained measure by RBI, given the global economic ballgame. Soaring commodity prices especially with food and energy prices, plummeting currencies, supply side shocks are the foremost reasons for rising input cost. A two-thong approach by the RBI governor and the Government of India by means of monetary and fiscal intervention is an absolutely necessitated step to administer economic growth as well as arrest inflationary pressure. A corroborated approach is hailed by India Inc to sustain economic resiliency and boost sentiments. It is evident that home loan interest rate hike will impair the home buying rally as pay out in terms of EMI is scheduled to rise. But according to me this crater in demand sentiment is a makeshift move, as home loans are based on floating rate for a long tenure. The EMI constraint will be eased as rates are expected to normalize once the global situation is stabilized. The hike in the limit of individual loans by co-operative banks by 100 per cent is a welcome initiative for home buyers who opt for home loans from co-op banks.”

Anuj Puri, Chairman, ANAROCK said, “As anticipated, with inflation edging higher in the aftermath of the Russia-Ukraine war and the surging oil prices, the RBI has decided to increase the repo rates by 50 bps. It is now increased to 4.90%. A hike was inevitable, but we are now entering the red zone. Any future hikes will reflect markedly on housing sales.Considering that inflation continues above its target zone of 6%, a hike was inevitable, and it will doubtlessly have some repercussions on housing uptake. The RBI is tasked with controlling the spiralling inflation in the country but must simultaneously be careful to not hurt demand recovery. This is a tightrope walk under the best of circumstances. Overall, high inflation with low GDP can be cause of worry but as of now the Indian economy remains robust.”

Ramesh Nair, CEO, India and MD, Market Development, Asia, Colliers said, “On expected lines, RBI hiked repo rate by a further 50 bps to 4.9% while continuing to move away from its accommodative stance. The hovering inflationary concerns amidst the resilient domestic economy supports this RBI’s aggressive move. Despite the challenging global environment, Indian economy is strongly placed and on the path to recovery and GDP growth is pegged at 7.2% for FY 2022-23. On a cumulative basis, this translates into an almost percentage point increase in repo rate in the last 1 month. However, it remains lower than the pre-pandemic level of 5.15%. We expect banks to gradually pass on this rise in the form of higher home loan rates in the coming months. An opportune time for homebuyers to take advantage of the prevailing home loan rates at a time when prices are also expected to rise in most of the markets led by revival in demand”.

Amit Goyal, CEO, India Sotheby's International Realty said, “RBI decision to hike the policy rates is on the expected lines. With inflation lingering obstinately high, RBI had little choice. We hope the hike in repo rate would rein in rising commodity prices and ensure sustainable growth in the long term. At the same time, we don't see any major impact of the demand side in the housing market, which continues to remain strong. We are hopeful with the supply side measures taken by the government,   inflation will cool down by the year-end, and the central bank will revert to a lower interest rate regime”.

Rohit Gera, Managing Director, Gera Developments said “The increase in rates by the RBI is along expected lines.  The cumulative increase of 90 basis points will increase the mortgage payments for home buyers, however, given the fact that the overall increase in cost of homes over the past 5 years has been negligible, this increase in interest rates can be absorbed by borrowers looking to buy homes.  The increase will affect the cost of borrowings for developers already reeling under severe margin pressure on account of inflation in input costs.”

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “A repo rate hike of 50 bps was imminent given the current inflationary trajectory and geopolitical concerns. Although the government has taken various measures to control domestic inflation such as food export restriction and cut in excise duty, prolonged war and spike in global crude oil price is still worrisome.  From a real estate perspective, home loans are set to get costlier. Banks have already raised the interest rate on home loan by 30-40bps since the earlier repo rate hike by the RBI in May and now with the repo rate cumulatively higher by 90 basis point there will be further increase in interest rate for homebuyers”

Tags : Realty Sector RBI’s Repo Rate Hike Reformative & Balanced Approach Shishir Baijal Chairman & Managing Director Knight Frank India Rohit Gera Managing Director Gera Developments  Ramesh Nair CEO India and MD Market Development Asia Colliers Anuj Puri Chairman ANAROCK Dr Niranjan Hiranandani