Real estate on RBI repo rate

The benchmark repo rate has been raised by 35 basis points (bps) to 6.25 percent with effect immediately by the Reserve Bank of India's monetary policies committee (MPC), which sets interest rates. The central bank has increased the rate for five straight months. The repo rate refers to the interest rate at which the RBI loans money to all commercial banks. Real estate experts have spoken their opinions on the matter.
 
Manoj Gaur, CMD Gaurs Group & President CREDAI NCR said, “The current repo rate hike by 35 basis points is not encouraging for the real estate sector. This is the fifth increase since May this year, and in these eight months, the hike's quantum is already 2.25%. This continuous increase will surely dent the sector. Coupled with rising input costs, the cumulative impact on the sector will be huge. We sincerely hope that this would be RBI’s last rate hike in recent times, or else the buoyancy in the real estate sector which is majorly driving the economy is going to vanish.
 
According to Ankit Kansal, Managing Director, 360 Realtors, “RBI’s increase of the Repo rate for the 5th time in a row further reflects its policy of withdrawal from the accommodative stance it has been following in the face of the pandemic. Inflation is high not just in India but also globally and it is imperative for the leadership to take steps to plug in the rise in prices. However, the overall economy is on a strong footing and the RBI has estimated a GDP growth of 6.8% for FY 23. This is a healthy sign for sectors such as real estate, which are greatly correlated with the general health of the macro economy. Indian real estate has recovered fast in 2022 and the positive momentum will continue in the coming years. This will be pinned on healthy underlying structures such as organic demand, a rise in disposable income, massive investments in infrastructure, and attractive demographic dividend.”
 
Ashwani Kumar, Pyramid Infratech said, “India is on the verge of facing immense inflation, thus RBI’s move appears to be reasonable. House prices and home loan interest rates will soon climb as a result of the repo rate's decision to be raised by 35 basis points. However, it will also benefit the real estate industry, which has gained a remarkable economy following this year's stable market performance. Housing demand is booming and will reach its highest point in 2023 as homebuyers are showing a massive interest in projects.”
 
Nayan Raheja, Raheja Developers said, “The RBI's decision to raise the Repo rate for the fifth consecutive time further demonstrates its decision to tackle inflation across the world by announcing minor hikes in repo rates. This is encouraging news for industries like real estate, which are closely tied to the macroeconomic environment. In 2022, Indian real estate quickly recovered, and the upward trend will continue in the upcoming years. The step will bring an increase in home prices, however, it can be dealt with by offering efficient projects, keeping the trust of buyers intact.”
 
Sumit Agarwal, Director, Sales & Leasing, Bhutani Grandthum said, “The 35 bps repo rate hike will have a prominent impact on loan borrowings, which have witnessed a healthy demand this year. The inflation rates are also taming and we expected that there would be no further hikes as it would cause a dent in the real estate, which has marked a great improvement this year. For the momentum to continue, there needs to be stable loan borrowing rates for investors’ benefit, the consistently increasing repo rates could dampen the outflow of money that is being invested in real estate spaces.”
 
Kushagar Ansal, Director Ansal Housing said, "Housing demand has witnessed an unprecedented decline which will remain high in 2023. The increase in the repo rate will not have a major impact on the demand for real estate, but this move by RBI will help in containing inflation which affects the realty sector as well."