Repo Rate Hike Should Have Been Deferred To Post-Festive Season

Rohit Gera, Managing Director, Gera Developments, “While inflation is a concern and this issue needs to be addressed, the decision to hike rates ought to have been deferred - raising interest rates at a time of uncertainty at the global level adds to concerns of a slowdown in the economy. Interest rates are a sensitive issue for home buyers as rising interest rates negatively impact affordability.”

Abhishek Kapoor, CEO, Puravankara Limited, “In view of the current state of the global financial markets, the Reserve Bank of India's (RBI) decision to increase the repo rate by 50 basis points to 5.9% is on expected lines considering the surge in inflation and recent rate hikes by the US Fed and central banks of the UK and the EU.  Currently, we do not see an impact on the business, as demand for new properties remains buoyant during the festive season that extends over the next two quarters.  While we are in a good position, we have to see the sustainability of continued rate hikes, especially from Q1 2023. If this rate hike sustains, then we will have to be careful and watch for the impact it will have on economy and business from next year. The Government and the RBI will have to be cautious about not compromising growth while managing inflation.”  

Amarendra Sahu, Founder & CEO, NestAway Technologies, “As expected the RBI has hiked key rates by 50 bps in an effort to control inflation and provide support to the currency. With this hike, the rates have gone up by 190 bps cumulatively this calendar year alone. The hike in rates will push up the rates for homebuyers, further affecting housing affordability. The trend of the workforce returning back to the workplace and the rise in economic activities will likely keep rates elevated for longer than expected. The home mortgage rates are now back to pre-COVID levels or even higher. This is likely to increase traction in the rental segment. A higher home acquisition cost and interest rates will make renting far more affordable. Also, homebuyers will likely wait for the current cycle to get over.”

Nitin Bavisi- CFO at Ajmera Realty, “The quantum of the rate hike was in line with the market expectation, focusing towards withdrawal of accommodative stance and also the real GDP for FY 23 forecasted as 7%. Markets also anticipate that this increase will lead to the higher end of the interest rate cycle. Increases in interest rates above this level may be concerning for long-term borrowers and may dampen consumer demand for the holiday season. At current levels, the real estate economics will continue to maintain its momentum, especially in short to medium term. From a long term perspective, besides the domestic inflationary challenges, US Fed and ECB are expected to continue with the trend of raising interest rates which will necessitate rate hike action by RBI."

Manoj Gaur, President CREDAI-NCR & CMD, Gaurs Group, The current 50 BPS repo rate hike by RBI now takes it higher than the pre-pandemic levels. At one level it reflects the confidence in the economy and future growth outlook at another level it was necessitated by the recent global developments such as the Russia-Ukraine conflict including aggressive monetary policies pursued by global central banks. Even though it will have a marginal impact on the real estate sector but I wish RBI had deferred this increase for the post-festive season. The buyer’s sentiments so far has remained buoyant towards residential real estate signalling the preference for real estate as an asset class. We are confident the buoyancy will remain intact.”

Manju Yagnik, Vice Chairperson, Nahar Group, Sr. Vice President, NAREDCO Maharashtra, "The current hike of 50 bps from the RBI was on expected lines as it is extremely essential for India to control the rising inflation numbers. Rising inflation is an international phenomenon as even the US Federal Reserve hiked the interest rates by 75 basis points. The Indian real estate consumers, however, had already factored in this hike as was evident in the unprecedented registration numbers registered in the past 2 months. With real estate valuations expected to appreciate in the long term, this upcoming festive season should witness a massive uptick in demand as consumers would throng back to the market to take advantage of the multiple new projects and new offers."