The decision to maintain status quo on key policy rates is significant as it comes at the onset of the festive season. The RBI maintained monetary policy pause, keeping the repo rate unchanged at 4 percent and reverse repo rate at 3.35 percent.
The low home loan interest rates regime will continue in the market and help foster housing demand during the ongoing festive season, realty sector players said.
Hailing RBI’s move to keep rates unchanged despite the inflationary pressures, they said adequate liquidity, and stable repo rate will play a catalytic role in the robust recovery of the country’s housing sector.
Realty sector players weigh in with their comments
Shishir Baijal, Chairman & Managing Director, Knight Frank India.
Over the last few quarters, there has been a fundamental change in buyers’ expectations and attitude towards home ownership, which has resulted in the residential real estate sector perform exceedingly well across all segments. Many factors, especially demand stimulants like stamp duty cut and lower circle rates along with lowest ever home loan rates, have helped in converting latent demand to sales. RBI’s accommodative stance will allow banks to continue providing home loans at the current levels.
At this juncture we are favorably poised with an encouraging ramp up on vaccination rate across the country, ongoing festive season, and opening up of the country, the time is right to ensure an orbital shift for the industry. Significant and timely measures for a sector like real estate, which has strong linkages with several other industries, would translate into a significant push to overall economic growth of the country.
Anuj Puri, Chairman - ANAROCK Group
The MPC’s decision to keep interest rates unchanged is once again an indication that interest rates will continue to remain low and are unlikely to go up in the short term.
The current decision will certainly bode well for all interest-sensitive sectors, like Commercial Vehicle financing and affordable housing, among others. A lower interest regime may potentially result in an uptick in demand in the run-up to the festive season, especially as the pandemic retreats and markets witness some forms of revenge buying especially for CV and affordable housing.”
This is a period when housing sales usually surge on the back of attractive offers by developers and lending banks. The green shoots of economic revival coupled with the prevailing low interest rates will be conducive for the residential sector in the short to mid-term.
Anarock Research indicates that we may see at least 10-15 percent growth in housing demand in the ongoing festive period (Oct.-Dec) across the top 7 cities against the preceding quarter. In Q3 2021, the top 7 cities saw total housing sales of nearly 62,800 units – already the best quarterly sales since the pandemic.
If Anarock's predictions are accurate, the ongoing festive quarter will see at least a 35-40 percent yearly rise in overall housing sales across the top 7 cities as against the same period in 2020. In Q4 2020, the top 7 cities saw total housing sales of nearly 50,900 units.
Ravindra Sudhalkar, CEO, Reliance Home Finance
The decision to keep the repo rate unchanged at 4 percent for the eighth consecutive time was expected, given that we are not quite out of the woods yet. It is however encouraging that the RBI has been reassured to continue with its accommodative stance. While the RBI retains a gross GDP growth target at 9.5 percent in FY22, it is evident that the central bank is keeping a hawk eye on growth indicators on one hand and inflation trajectory on the other.
Rohit Poddar, Managing Director, Poddar Housing and Development Ltd
The RBI’s decision to maintain the repo rate unchanged at 4%, point towards the road to economic recovery. It is good to see that overall economic activity in the country has evolved and inflation has remained lower than the anticipated numbers. Expected gradual improvement in the domestic conditions and the successful drive of vaccination campaign will boost consumer sentiments and improvise aggregate demand in the country. We are evidently in a much better place compared to the last year owing to the proactive measures taken by the government which is resulting into achieving stability in the economic fundamentals of the country. Furthermore, this will positively impact the housing sales in the upcoming festive season and the RBI is confident of enabling economic growth with the measures taken.
Amit Goyal, CEO, India Sotheby's International Realty
We welcome RBI's status quo on policy rates. This will mean a continuation of low home loan rates which will keep the demand momentum for homes going. In the last couple of months, we have witnessed a further reduction in interest rates of home loans to 6.5 percent per annum by leading financial institutions.
The RBI governor also announced that there are strong signals of recovery in the service industry, especially in IT services. The expected GDP growth target for the current fiscal has been raised as well. Factors also indicate softening of inflation in the near term. All in all, this brings in a lot of confidence in the Indian economy, which itself is a big positive for the housing sector.
Ramesh Nair, Chief Executive Officer- India and Market Development, Asia, Colliers
For the 8th consecutive time, the Reserve Bank of India has kept repo rates unchanged at 4 percent. We predicted that the repo rate will remain constant to boost consumption in the ongoing festive period. It will go a long way in steering housing sales. Several banks have already lowered their home loans rates by a stable repo rate since September 2021. Overall, it is a good time for homebuyers who can avail of low home loan rates, along with steady prices.
Pradeep Misra, MD, New Modern Buildwell Private Ltd,
The continuation of accommodative monetary policy by RBI means home loan interest rates would continue to remain low and this will help the real estate sector, particularly in tier 2 & 3 cities. Amid the festive discounts and schemes being offered by the industry accompanied by lower interest rates, we expect this festive season to be a good one for the sector.
Ramani Sastri - Chairman & MD, Sterling Developers Pvt. Ltd.
The RBI's approach to continue with the status quo is on expected lines to enable the growth momentum that seems to have set in during the last couple of months. For home buyers, this decision will help reinstate confidence and further access to affordable home loans. It also goes without saying that the real estate industry's perennial hope is fixed on lower interest rates as it improves affordability.
Home loan interest rates have already gone down substantially in the recent past, and are presently at an all-time low and property prices have been stable. Hence this is the right time for prospective home buyers to invest. Homebuyers will continue to take advantage of the lowest ever home loan interest rates. The move to reduce interest rates by few banks recently is encouraging and will pave path for robust housing demand further.
Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, luxury holiday homes
RBI maintaining status quo on key policy rates was expected given the inflationary concerns in recent months and also maintaining financial stability and boost demand during the ongoing festive season. Residential demand is reviving in the pandemic context and this needs to be fostered. We have already seen early signs of improvement in economic activity following the easing of restrictions post the peaking of the second wave. Given the upcoming festive season, which is considered auspicious by a large number of Indians to make big-ticket purchases, the timing of reduction in interest rate by banks recently couldn't have been better and will lead to a substantial increase in sales. The low interest rate regime is going to be a game-changer for the whole real estate sector especially at a time when the economy is on a recovery trail.
Cherag Ramakrishnan, Managing Director, CR Realty
This approach is extremely productive and industry friendly. Specially the interest rate sensitive sectors like Realty will benefit immensely from not only all time low interest rates but also high levels of liquidity that the Central bank has allowed the banks to maintain."
Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory
The RBI and especially the MPC are to be commended for maintaining an accommodative stance for the eight consecutive time now. Their approach towards tackling the economy amidst the pandemic has been one of the finest. The various policy reforms along with the all-time low housing loan rates have given the much-required fillip to sales activity in the last few quarters. The all-time low rates regime in the festive season will boost the housing demand and help the economy to get back to the pre-COVID levels.
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
The RBI’s decision to continue with the accommodative stance by keeping the interest rates unchanged is a welcome move for the sector. The decision will induce optimism, encourage buyer’s confidence and propel pent up housing demand.
The pandemic has reinstated the importance of home ownership. Low interest rates amidst the festive season, positive market sentiment and receding Covid-19 cases, together create a favourable condition for home-buying. To benefit from one of the best home-buying periods, homebuyers must immediately translate their plans in to action and avoid prolonging them further.
Harsh Vardhan Patodia - President, CREDAI
The RBI’s move of keeping the repo rate at 4% and reverse repo rate at 3.55% is a welcome move. The acknowledgment of taking an accommodative stance while having indicators of economic recovery is a message in the right direction. While inflation has been better than expected with the festive season coming in and RBI keeping rates at status quo we look forward to more support from bankers on home loans to push the festive sales cheer.
Ashok Mohanani - President, NAREDCO Maharashtra
The economic growth needs to be supported through monetary policy and this is the foremost reason that the RBI has continued its accommodative stance. We have seen a revival in real estate and related sectors because of the rising vaccination numbers. Also, the interest rates will continue to be at a record low for some time. Therefore, this is the best time to buy a home as it gives the aspiring homebuyers a lifetime opportunity to purchase their dream home with various festive offers as well as all-time low interest rates."
Amit Goyal, CEO, India Sotheby's International Realty
We welcome RBI's status quo on policy rates. This will mean a continuation of low home loan rates which will keep the demand momentum for homes going. In the last couple of months, we have witnessed a further reduction in interest rates of home loans to 6.5% per annum by leading financial institutions.
The RBI governor also announced that there are strong signals of recovery in the service industry, especially in IT services. The expected GDP growth target for the current fiscal has been raised as well. Factors also indicate softening of inflation in the near term. All in all, this brings in a lot of confidence in the Indian economy, which itself is a big positive for the housing sector.
Shraddha Kedia-Agarwal, Director, Transcon Developers
The RBI maintaining status quo on key policy rates was expected to maintain the financial stability before the festive season. The all-time low interest rates have already given a boost to the real estate sector upticking the demand in the last few quarters and enhancing the confidence of the homebuyers. It has also helped the sector to regain its strength as well as stay afloat during these unprecedented times. The Government's favourable policy measures along with festive deals will help sustain the demand during the festive season.
Himanshu Jain, VP - Sales, Marketing and CRM, Satellite Developers Pvt. Ltd.
Repo rate cuts have been kept unchanged by the RBI to sustain the financial stability and boost demand during the ongoing festive season. The current scenario offers excellent investment opportunities in the residential segment as affordability is at all-time high. With the banks and financial institutions further slashing the interest rates, it will provide a much-needed fillip to the real estate sales in the festive season.
Vinay Kedia - Director, Prescon Group
The RBI and the government have been implementing a number of measures to help the real estate sector. Although the low interest rates will provide sustained growth for the real estate sector, developer's focus on project completion and delivery will be the key factors driving the real estate demand going forward. Homebuyers should take advantage of the current scenario as many major banks and housing finance organisations are offering low-interest home loans owing to the festive season ahead.
Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI MCHI
We welcome the RBIs decision to continue with their accommodative stance ahead of the festive season. The rising vaccinations should lead to opening up of the contact-intensive services sector which were hit hard by the virus. The low interest rates have been a crucial factor in the revival of the demand in the real estate sector. Also, the reduction in home loan interest rates by leading banks for a limited period have extended the best buying opportunity for the homebuyers. The buyers are already coming back to the market and we feel that the upcoming festive season will be a lot better than the previous years. For the next few days, the buyers can swoop in on good deals on the back of rock-bottom interest rates on home loans along with festive offers from good developers on the eve of expected price rise.
Bhushan Nemlekar, Director, Sumit Woods Limited
On an expected line, the monetary policy committee (MPC) has kept the repo rate unchanged with an extended accommodative stance for the eight consecutive time that will continue to serve the markets well in the festive season. The prevailing low home loan rates are already enticing for homebuyers which has immensely benefited the real estate sector. The record low interest together with the festive deals will encourage the consumers to proceed with their purchase and quickly close their transactions.
Sandeep Runwal, Managing Director, Runwal Group and President Elect, NAREDCO Maharashtra
The RBI has always taken a proactive stance to ensure liquidity in the past few months since Covid. It is imperative that low mortgage rates would continue for at least some more time now or maybe until the end of the year. The end-user interest has increased mostly due to the all-time low home loan interest rate regime which has provided the required fuel for the growth of the economy along with the real estate industry with which several other allied sectors are linked. Apart from the low-interest rates, the consumers' realization of owning a home along with key policy measures have been the growth drivers for the real estate sector in the past few quarters and the strong demand is expected to continue in the festive season as well.
Deepak Goradia – President, CREDAI – MCHI
RBI’s decision to keep the repo rate unchanged consecutively for the second time at 4% echoes well with the positive market sentiment, ahead of the festive season. This coupled with low home loan rates will help homebuyers enjoy maximum benefits while purchasing their dream homes.
Divaker Bhalla, Founder, iProp Money
RBI has given a reason cheer to the housing sector by keeping the policy rates unchanged. This will bring in the lost momentum in the sector during festival season and much needed activity in the sector. The constant stance on policy rates shows RBI and Government commitment towards the real-estate industry and millions of people getting employment in this unorganized sector.
Shiv Parekh, Founder, hBits
The real-estate sector is based on sentiments; the positive indicators are enough for real action and momentum. Despite the gloomy environment across businesses, commercial real-estate has not only held ground but has also given good returns post Covid to investors. Our investors have seen a steady return on investment even during tough times. RBI keeping the policy rates is the right step towards creating a positive investment friendly environment. This step will go a long way to improve the business environment and easy access to capital will help economic recovery.
Ram Raheja, Director, S Raheja Realty Pvt Ltd.
The RBI's resolve to keep easy system liquidity and low interest is key to the recovery of the real estate industry and the overall economy. The real estate sector is expected to continue benefiting from the pass-through of low benchmark lending rates to end consumers, especially in the residential segment. The optimism of RBI regarding economic growth is welcome; It will also help in sustaining economic stability as well as keep the real estate sector stay afloat during these unprecedented times. The demand for homes is likely to continue to gain momentum going forward.
