The RBI at its monetary policy meeting on Friday kept repo and reverse repo rates at 4% and 3.35%, respectively, and decided to continue its accommodative stance to revive and support growth as well. that to mitigate the impact of COVID-19 on the economy.
Welcoming the RBI’s decision to keep policy rates unchanged, real estate experts and developers have said interest rates on home loans will remain at an all-time low during the holiday season, which is crucial for the revival of the housing sector as well as the Indian economy.
“Bank loans to NBFCs for priority on-lending are extended by 6 months, which will ease the liquidity situation. The low mortgage rates associated with the festive offers from developers will strongly stimulate demand this quarter. We call on all state governments to reduce stamp duties on property registration until December. It could be a game changer. Nonetheless, low interest rates on home loans, stable house prices, and offers from developers in the form of freebies and relaxed payment plans make this holiday season the best time to buy a property, ”Vikas said. Wadhawan, Group Chief Financial Officer, Housing.com, Makaan. com and Proptiger.com.
Ram Raheja, Director of S Raheja Realty Pvt Ltd, said: “This status quo will further create demand, including for high impact products like real estate. RBI’s determination to maintain easy system liquidity and a low interest rate is key to the recovery of the real estate industry and the economy in general. The real estate sector should continue to benefit from the pass-through of low benchmark lending rates to end consumers, particularly in the residential segment. RBI’s optimism regarding economic growth is welcome. It will also help maintain economic stability and keep the real estate sector afloat in these unprecedented times. The demand for housing is expected to continue to grow in the future. ”
Industry experts have observed that economic growth along with containing any rising inflation is the top priority for India’s government and central bank. Therefore, no change in the repo rate (and repo rate) was expected.
“After the cycle of slowdown caused by Wave 2, the Indian economy is once again optimistic. FICCI forecast growth of 9.1% in fiscal 22, based on an expansion of 12.9% and 8.6% in the industrial and service sector, respectively. An upsurge in real estate sales and growth in agricultural production will further stimulate the economy. However, government agencies should also be careful to keep borrowing rates low, as this will continue to steer the economy in a positive direction and create the ground for a faster recovery, ”said Ankit Kansal, Founder and Managing Director. of 360 Realtors.
The developers believe that keeping the repo rate unchanged will also help a lot to keep the sentiment of buyers and clients should take advantage of the current situation.
Amarjit Bakshi, CMD, Central Park, observed: “The RBI has ensured proper liquidity in the system when everyone is grappling with it; the cash injected into the system during the first six months of the current fiscal year was Rs 2.37 lakh crore. While we have hoped for real estate related announcements, we recognize that the RBI must focus on all sectors to achieve economic development. Maintaining the repo rate in real estate will help a lot in terms of sustaining buyer sentiment. “
Pradeep Aggarwal, Founder and Chairman of Signature Global Group and Chairman of the National Real Estate and Housing Council, ASSOCHAM, said: “The continued accommodating attitude of apex bank is greatly appreciated. Low interest rates on home loans are already helping the industry, and the RBI has helped the industry by maintaining the status quo. Customers should take advantage of the current situation as prices may increase in the future due to higher raw material costs. “
Developers believe the low interest rate regime will be a game-changer for the real estate industry, especially at a time when the economy is on the road to recovery.
“Residential demand is reborn in the context of a pandemic and this must be encouraged. We have already seen the first signs of improving economic activity following the easing of restrictions after the peak of the second wave. With the coming holiday season seen as auspicious by many Indians for expensive shopping, the timing of the banks’ interest rate cuts recently could not have been better and will lead to a substantial increase in sales. The low interest rate regime will be a game-changer for the entire real estate industry, especially at a time when the economy is on the road to recovery. For any investor this is a time of great opportunity and for the end customer it is a good time to buy, ”said Lincoln Bennet Rodrigues, President and Founder of the Bennet and Bernard Company, known for its vacation homes. luxury in Goa.
Pankaj Bansal, Director of M3M, said: “The RBI’s position on keeping the repo rate at 4% will go a long way to helping the real estate industry and the market to accelerate growth. The industry has received immense support from policy makers which has helped boost investment and consumer confidence in the market. The past few quarters have been very encouraging for the industry with huge sales and inquiries occurring across all industries. The holiday season, along with pent-up demand and low mortgage rates, create a jubilant atmosphere. As economic activities intensify further, promising results are expected in the coming quarters. “
“Over the past two quarters, the real estate sector has experienced great traction and performed very well. Improving market sentiment and increasing traction indicate that the industry is moving on an upward growth path. Maintaining the accommodative stance will allow banks to lend mortgage loans at current levels, which is a most encouraging factor in buyers’ decisions, ”said Santosh Agarwal, CFO and Executive Director of Alpha Corp.
“The RBI’s dovish stance on keeping the repo rate unchanged will add spice to the real estate industry this holiday season. The industry has recovered from the pandemic shocks and entered the growth phase. Real estate assets have always been the most preferred investment choice for stability and a secure future, and this move will keep the momentum going. Supported by digitization and vaccination, the market is experiencing huge sales and inquiries across all segments. Pent-up demand, low interest rates and, more importantly, the realization of the importance of owning a home will put the housing market on an upward trajectory in the coming quarters, ”said Mukul Bansal, Director by Motia Group.
Some consultants and developers have said, however, that it would have been better for real estate if the RBI had announced a rate cut to support demand in the sector during the upcoming festival season.
Honeyy Katiyal, Founder of Investors Clinic, said: “As a real estate consultant, we would have liked to see the RBI announce a rate cut to support demand in the real estate industry for the upcoming festival season. It would have been an economic accelerator for the real estate industry which has suffered greatly over the past two and a half years. The key rates at these levels are also favorable. Housing demand has shown early signs of recovery and is expected to hold up, with price incentives provided to investors by property developers, which will certainly further support the economic recovery and improving the employment scenario. The sector operates on sentiment. A burst of positivity will turn the tide this festival season for developers and real estate players.
Uddhav Poddar, MD, Bhumika Group, said, “We need to keep buyers motivated, especially as the festival season approaches. The demand was to lower interest rates further to rekindle demand, make homes and real estate assets more attractive with low MEIs. However, retail will benefit from the proposal to introduce a framework for offline retail digital payments, and the proposal to increase the IMPS limit per transaction to Rs 5 lakh from Rs 2 lakh currently. If introduced, these measures will help increase spending that will contribute to the positive growth of the economy. “