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Unchanged repo rate to encourage housing purchases: Realty sector
The Hindu Business Line  |  December 6, 2018

Our Bureau Mumbai

RBI’s decision to keep repo rate unchanged after two successive hikes in June and August will encourage home buyers to go ahead with their purchase plans. The move has come as a relief to the real estate industry already struggling with high inventory and low liquidity post the NBFC crisis.

 

“While back-to-back rate hikes in June and August had impacted buyers’ sentiments in the interim, maintaining the status quo on policy rate in October and in today’s policy announcement will reinforce the confidence of home buyers and they will be encouraged to go ahead with their plans to buy house,” Ramesh Nair, Country Head, JLL India said.

 

“Overall, this will have a positive impact on the housing market and we expect better sales and launches on the back of improved economic scenario,” he added.

 

Big relief

 

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said any rate hike would have adversely impacted the market. “Since the last Monetary Policy Committee Meeting, there has been a big relief with the fall in crude prices and the strengthening of the Rupee, thus, reducing inflationary risk. We believe the easing inflation situation and the need to actively support growth are the primary consideration for the MPC to maintain a status quo on rates.’’

 

Parth Mehta, MD at Paradigm Realty, said the rate hikes earlier this year have resulted in higher home loans, thus impacting the demand. “Along with GST, it became a major deterrent to demand for under-construction projects. Unchanged repo rate at 6.50 per cent is a major relief to real estate as the sector is already facing liquidity issues, resulting in slowdown of loan approvals and disbursements for developers. “

 

However, Farshid Cooper, MD of Spenta Corporation, said a rate cut at this stage would have helped in lowering the home loan interest rates. “It could have made the home buying a reality for most buyers who have been eagerly waiting for the rates to go down. We hope RBI will take measures in the near future to ensure the stability is maintained in the real estate market.”

 

For now, the unchanged repo rate of 6.50 per cent will keep the approach steady for potential home buyers to invest, he added.