In line with market expectations, Reserve Bank of India Governor Raghuram Rajan on Tuesday kept the repo rate unchanged at 6.75 per cent in the fifth bimonthly monetary policy statement of the current fiscal. The real estate industry players and experts’ reaction to the RBI’s status quo on key rates was also on the expected lines.
According to Manoj Gaur, President, Credai NCR & MD, Gaursons India Ltd, “Reduction in rates in the earlier policy helped to spur the economic growth along with leaving a positive impact on real estate market. The earlier rates were surprisingly slashed down to higher than expected 50 basis points bringing cheers to the realty sector. Unchanged rates this time, however, were along the expected lines but we are hopeful that RBI will give reduction in interest rates in the next policy review.”
Deepak Kapoor, President, Credai Western UP, also called it an “expected move from the RBI” because in the last policy review the rates were reduced by 50 bps. In his response sent to R&M, Kapoor said, “The RBI should compel all the banks to reduce the rates as only few banks have reduced the interest rates. We feel that after the reduction of 50 bps the sector responded very well and today we see that the economy has grown at the rate of 7.4 per cent this quarter. If all the banks pass on the benefit to customers we can see a revival in the real estate sector and continue to enjoy the growth rate at current pace”.
Gaurav Gupta, General Secretary of Credai Raj Nagar Extension, said the RBI has held the interest rates steady which was “an anticipated move”. However, he said, “A further reduction would have improved the real estate sentiments and propped up growth too. Real estate is a sector which is already facing issues of huge inventory and any cut in rates would have positively affected the real estate market further improving the demand by homebuyers too.”
According to Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes: “RBI already gave a strong 50 bps cut which left little room for further reduction in rates this time. Unchanged policy rates are also a sign that economic growth is picking up along with revival in investments. Although cut in interest rates would have benefitted the real estate sector but we are eyeing for better market conditions ahead. Reduction in policy rates at this moment would have had a noteworthy impact in boosting the realty sector and facilitating growth”.
Exuding optimism, Sanjay Rastogi, Director, Saviour Builders, said, “Once inflation is under control we can expect RBI to give further reduction in interest rates. The move to keep policy rates unchanged is along the line to keep inflation under control and on the other hand it is also an indication that economy of our country is on track of improvement.”
Sanjeev Srivastva, MD, Assotech Ltd, said “RBI’s move to maintain the status quo on policy came as an expected move after a big rate cut in previous bi-monthly policy. From long time, RBI has been taking steps to help the economy improve and real estate sector was also benefitted with such measures. Cut in rate cut in this policy review was hardly anticipated because throughout the fiscal, interest rates have either been reduced or kept stable.”
According to Prashant Tiwari, Chairman, Prateek Group, “Reduction in interest rates would have optimistically impacted the real estate sector and have enhanced the growth in realty sector. However the announcement came as a balanced move by RBI as a decent amount of rate cuts have already been given in previous policies to stimulate growth.”
In similar vein, Anil Kumar Tulsiani, CMD, Tulsiani Construction & Developers, said, “Constant drop of repo rates by RBI since the beginning of this year had led the potential homebuyers to plan their homes purchase. In line with market expectation, now RBI has kept repo rates unchanged and it’s good that no further increase in rates have been done.’
According to Suresh Garg Secretary, Credai Western UP & CMD, Nirala World, “No reduction in policy rates is not of any surprise as RBI has already slashed sufficiently many times since January this calendar year. Rate cuts are always watched upon so that the real estate sector could benefit resulting in direct benefit to the property seekers also. However, no change in the repo rate is also a positive sign that the economy is improving as per the Government policies.”
Yash Gupta, Senior MD & Country Head, Hines India Real Estate, said, “Citing comfortable ease in inflation, no rate cut was expected. We see little headroom to cut rates in the next few months. However, in the longer run we definitely foresee rate cuts that will boost the housing demand in India. We have seen few banks passing rate cut benefit to the home borrowers but we expect more banks to follow the same trend in the coming months.”
Devina Ghildial, Managing Director, South Asia, RICS, said, “Considering the overall economic situation, earlier reductions in repo rate have consistently eased off inflationary pressure, which is visible over the last few months. However this has not really transformed in pushing up housing demand in real estate sector, which is evident from industry reports released in the last quarter. In the long run, we foresee further rate cuts which will provide necessary impetus for housing demand to grow in India. We have also seen the banks passing on the rate cut benefits to home loan borrowers and we expect this trend to continue over the next few quarters”