Mumbai: Wednesday’s interest rate hike announcement by the Reserve Bank of India (RBI) was on the anticipated lines for the real estate industry sector as well as those who have and will apply for home loans.
After holding three days-long deliberations during the Monetary Policy Committee meeting, the RBI announced an increase in repo rate by 35 basis points or 0.35% with immediate effect.
Responding to the decision, Boman Irani, Chairman and Managing Director of Rustomjee Group and President of CREDAI-MCHI said, “The performance of the housing sector in the last quarter of 2022 has been outstanding. Consumer demand remained robust with sales rising by 4% against the preceding quarter and 41% annually. The 35 basis points rate hike by the RBI, the fifth rate hike this year was well anticipated. With repo rates now at 6.25%, there may be some repercussions on the housing uptake. The Indian housing market is largely end-user driven and they look at the value over the home acquisition cost. The increase in the home loans would have a moderate impact.”
Even Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani is of the view that there will be some impact on the homebuying sentiment. However, he anticipates the demand to sustain, considering the necessity to own a home is of profound importance and “2022 has favoured the luxury housing segment, the homebuyers grabbed the opportunity of festive offers and sealed the deal."
This is the fifth consecutive time that the policy rate has been increased. In these five hikes, the total rate hike has been 150 basis points or 1.5%.
Though the industry players including Shraddha Kedia-Agarwal, Director, Transcon Developers and Piyush Gupta, Managing Director (Capital Markets and Investment Services) Colliers India, agree about the impact, they term the impact to “the overall demand to be for a short term”.
