Mumbai realty sector gives thumbs down to RBI repo rate hike
Both builders and realty experts said that this move will increase interest rates on home loans as well as on EMIsmumbai Updated: Aug 02, 2018 15:14 IST
The city’s real estate sector has expressed disappointment over the repo rate hike announced by the Reserve Bank of India (RBI), saying it will adversely affect already slowing sales in Mumbai.
This 25 basis point hike by RBI comes just after the state government’s announcement of an additional 1% surcharge on stamp duty for realty deals.
Both builders and realty experts said that this move will increase interest rates on home loans as well as on EMIs (equated monthly instalments) for those who have already availed home loans.
”Sales will surely be impacted with the hike in repo rate. Buyers will also push further their decision to purchase low ticket size homes,’’ Samyak Jain, director of Siddha Group. Dhaval Ajmera, director of Ajmera Group, said, “This move will further dampen the already low spirits of the real estate sector, making home loans more expensive for potential seekers.”
Though there has been an increase in the number of launches by 128 % this year in the Mumbai Metropolitan Region (MMR) market, realty sales have remained stagnant. Homebuyers are currently being very cautious while both builders and experts have been critical about authorities not easing the situation and in fact, aggravating it despite the ambitious goal of ‘Housing for all by 2022’ by the Centre.
“The various initiatives implemented to make the housing scheme a success will go through a doomed phase due to raised rates, making the overall real estate market more expensive than ever,” said Amit Wadhwani, managing director of Sai Estate Consultants Chembur Pvt Ltd.
Repo rate is the interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements.
In the last few years, the real estate sector was faced with massive slowdown with a fall in both new launches and sales. The builders priced the apartments at exorbitant prices, forcing many buyers to postpone their plans. In addition, the RBI imposed stringent conditions for availing loans. The high-interest rates on home loans only aggravated the situation further. However, the interest rates have started coming down in recent times.
First Published: Aug 01, 2018 23:33 IST