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RBI Policy review: Unchanged interest rates expected to have a stabilizing effect on the real estate sector, say experts
Credai urges RBI to reduce repo rates in the upcoming monetary policy to reduce home loan interest rates and stimulate housing demand
As expected, the Reserve Bank of India (RBI) left its key interest rates unchanged on June 7. This, say real estate experts, augurs well for homebuyers and developers, as borrowing costs won't witness an increase and make home buying more accessible. Realtors said the decision to keep the repo rate unchanged in the latest monetary policy review is expected to have a stabilizing effect on the real estate sector.
The Monetary Policy Committee, consisting of three RBI and an equal number of external members, kept the repo rate unchanged at 6.50 per cent for an eighth straight policy meeting and stuck to its relatively hawkish stance of "withdrawal of accommodation", Governor Shaktikanta Das said in his statement.
Also Read: RBI Monetary Policy 2024: Stability in interest rates to benefit homebuyers; boost housing sales
Boman Irani, president, CREDAI said that despite today’s move to maintain the repo rate at 6.5%, RBI should look towards consolidating the ongoing GDP growth in the upcoming MPC meets by cutting the repo rates for the first time since February 2023, and offer lower lending rates that would boost consumer spending even more.
“It's positive news for future homeowners, as borrowing costs won't see an increase, making buying a home more accessible,” said Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.
Also Read: Real estate sector welcomes RBI’s decision to keep repo rates unchanged at 6.5%
G Hari Babu, National President of NAREDCO said that by keeping the inflation projection steady and maintaining the repo rate at 6.5%, the central bank is signaling its dedication to bolstering the economy and maintaining stability. This is particularly encouraging for both luxury and affordable housing developers alike.
“For the average homebuyer or developer, this is excellent news. It implies that borrowing costs will stay relatively affordable, potentially prompting more individuals to consider property investment,” he said.
“With the mandate of a stable government now manifested in an unchanged monetary policy, the housing sector's overall growth momentum will continue,” said Anuj Puri, Chairman - ANAROCK Group.
Also Read: RBI repo rate hold likely to boost homebuyers' sentiment to invest in real estate
RBI’s decision to keep the interest rates consistent at 6.50% is a welcoming step and a positive outcome for the home loan borrowers at present, said Sanjay Dutt, MD and CEO at Tata Realty & Infrastructure Ltd, TATA Realty & Infrastructure Ltd.
He said that the RBI has taken note of the impact of the market dynamics and the homebuyer sentiment towards the economy. Moreover, the real estate sector is anticipating lower interest rates later this year, particularly following the European Central Bank's recent reduction of its key policy rates, which is a significant monetary policy adjustment.
“This move by the ECB is expected to increase capital flow and liquidity in global markets, potentially creating favorable conditions for the RBI to consider lowering repo rates in the coming months,” he added.
“RBI's policy decision to maintain the status quo fosters consumer confidence and bodes well for the already thriving economy, especially the housing sector which is already witnessing a strong demand across all major cities of India. However, near-term fluctuations in food inflation will have to be monitored and tackled prudently,” said Anurag Mathur, CEO, Savills India.
