REACTIONS: Real Estate Sector on Repo Rates

In line with market expectations, the Reserve Bank of India (RBI) on September 30 announced a 50 basis points hike in the repo rate stepping up its fight against persistently high inflation. Repo is the rate at which the central bank lends short-term funds to banks. One bps is one-hundredth of a percentage point. With the latest rate hike, the repo rate now stands at 5.9%. Real estate sector shared views on the same.

Manoj Gaur, President CREDAI-NCR & CMD, Gaurs Group said, “The current 50 BPS repo rate hike by RBI now makes 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, I wish RBI had deferred this increase for the post-festive season. The buyers sentiments so far have remained buoyant towards residential real estate signalling the preference for real estate as an asset class. We are confident the buoyancy will remain intact.”

Nayan Raheja from Raheja Developers said, “While the last repo rate hike was aimed at controlling inflation, the present hike by 50 BPS has been majorly as a result of, as the RBI Governor had said, the aggressive monetary tightening by the world’s major central banks. Even though the quantum at present is still 5.9% it will definitely impact the long-term growth of the real estate market as this rate hike not only raises it above the pre-pandemic levels but also takes away the psychological cushion with the possibility of a further increase in the interest rates.”

According to Ankit Kansal . Managing Director & Founder, Axon Developers, “Today's hike by the RBI was on the expected lines. Across the world, major economies such as the USA and UK are hiking the rates to cool the economy and cut inflation. RBI’s rate hike is also on the lines of controlling inflation and protecting the economy from overheating. However, the overall housing demand is robust and it will be able to absorb any shock emanating from the rise in rates. Real estate demand is a complex socio- economic phenomenon, which is a by-product of a complex process. It does not only include bank rates but a host of other factors such as growth in the middle class, job market & disposable income, demographics dividend, growth in nuclear families, percentage of women in workforce, and others. To a great extent, these factors are signaling a robust recovery in Real estate and despite not so favorable home loan rates and a surge in raw material prices, FY 22 is set to be a record year for real estate sales.”

Dheeraj Bora, Marketing Head, Paramount Group said, “The repo rate is the rate at which the central bank lends short-term cash to banks. Today, RBI has announced a 50 basis point increase in the repo rate, ramping up its fight against stubbornly rising inflation. Home loans may soon become much more expensive due to this repo rate hike. It might have a minor impact on home purchases during the festive season quarter, particularly in the affordable and semi home segments.”

Expressing his views on the same Kushagra Ansal, Director Ansal Housing said, “RBI announced  5.9% increases in repo rates today. The realty sector market is presently in a strong position, and it is expected that the prices will increase and demand will be strong for the ensuing future.”

Ashwani Kumar, Pyramid Infratech said, “In its monetary policy review, the Reserve Bank of India (RBI) increased the policy repo rate by 50 basis points (bps) to 5.9%. In the current fiscal year, the repo rate has increased four times. The RBI made the decision to abandon its supportive approach while promoting growth during its Monetary Policy Committee (MPC) meeting. Home loans are still quite affordable in pricing. Thus, consumer lenders continue to be in a favorable position overall with regard to the Instalments they should pay.”