Mumbai: Real Estate Sector Welcomes RBI's Steady 6.5% Repo Rate, Anticipates Boost In Home Sales This Festive Season

Mumbai: Real Estate Sector Welcomes RBI's Steady 6.5% Repo Rate, Anticipates Boost In Home Sales This Festive Season

The real estate sector has welcomed the Reserve Bank of India’s decision to maintain the repo rate at 6.5% for the 10th consecutive time, especially during the festive season. With interest rates remaining stable, equated monthly instalments (EMIs) for home loans are expected to stay manageable, encouraging both current and prospective homeowners.

Bhalchandra ChorghadeUpdated: Wednesday, October 09, 2024, 10:12 PM IST
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RBI's steady repo rate of 6.5% is welcomed by the real estate sector as a boost for home sales during the festive season | Representative Image

Mumbai: The real estate sector has welcomed the Reserve Bank of India’s decision to maintain the repo rate at 6.5% for the 10th consecutive time, especially during the festive season. With interest rates remaining stable, equated monthly instalments (EMIs) for home loans are expected to stay manageable, encouraging both current and prospective homeowners.

This stability is anticipated to drive increased home sales in the upcoming months, providing a positive outlook for the housing sector. While some developers feel that a cut of 25 basis points could have energised festive sales and buoyed market sentiment, they say the current approach represents a prudent approach to ensuring economic stability.

Dr. Niranjan Hiranandani, Chairman of NAREDCO and Hiranandani Group, said, “Given the fact that real estate cycles persist longer, the current northbound momentum looks to continue for the foreseeable future owing to conducive economic weather. With India's projected GDP growth at 7.2%, demand-supply dynamics are expected to remain healthy. The increasing appetite for homeownership, heightened interest in upgrading to luxury homes, and rising investments in real estate assets will further sustain strong demand in the sector.”

Prashant Sharma, President, NAREDCO Maharashtra feels that the decision is particularly important for the real estate sector as it signals a steady interest rate environment in the near term, which can help sustain the ongoing demand for home loans. “As the sector gears up for the festive season, the maintained policy rate could further support housing demand and investment momentum," he said.

Developers believe that RBI’s decision to keep repo rates unchanged while shifting its stance to 'neutral' is a positive move for the real estate sector. As interest rates have been reduced by many central banks worldwide, the change in stance indicates that the RBI is preparing to follow a monetary policy that is in sync with the global trend.

“This is good news for home loan borrowers, as their EMIs will remain constant for now and may decline in the near future. This move is especially encouraging for first-time buyers, allowing them to plan better without the concern of rising interest costs," Kaushal Agarwal, Director and Co-Founder at The Guardians Real Estate Advisory, said.

Echoing similar feelings, Gauri Tandle, CFO at Ashwin Sheth Group said the decision augers well for mid-range and luxury residential offerings. “It will continue to foster consumer confidence by way of stability in home loan interest rates enabling buyers to invest in properties without the fear of rising interest rates. As developers too, this aligns well with their long-term interest as a positive consumer sentiment complemented with the right purchasing power quotient, helps empower the ecosystem players to continue project launches unabated and thereby score high on investment attractiveness.”

Domnic Romell, President, CREDAI-MCHI, opines that for the real estate sector in the Mumbai Metropolitan Region (MMR), the decision is crucial as it helps maintain current borrowing costs for both homebuyers and developers, providing consistency and predictability in the market.

“Since the repo rate directly influences loan interest rates, this decision ensures that home loan EMIs remain steady, offering relief to both first-time buyers and investors in a market where affordability is a constant challenge,” he said while Hitesh Uppal, Head of Finance, Magicbricks feels that on one hand, stable rates create a favourable borrowing environment for homebuyers and developers, boosting market confidence and help control inflation-related cost pressures, on the other it also tempers expectations for more affordable financing, which could slow buyer momentum.

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