The market has reacted. The RBI has been kind. Here’s what most had to say:
Sanjay Dutt, MD and CEO, Tata Realty & Infrastructure: The decision for the repo rate to remain unchanged at 6.50% is a welcome step, which a positive outcome for home loan borrowers at present. The RBI has taken note of the impact of market dynamics and homebuyer sentiment towards the economy. This will provide stability and encourage banks to lend to consumers, which will result in a higher credit flow to the housing sector. This will further boost the demand for residential real estate and make it an attractive investment for aspiring homebuyers.
Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate: The RBI’s decision to keep the repo rate unchanged was a much-needed respite for the real estate sector. This decision will provide stability in the home loan category and keep the EMIs unchanged. It will maintain the buying sentiment in the real estate sector and may lead to an upsurge in the mid-segment housing category. We also expect the demand for luxury and premium housing to remain unaffected. Despite the positive impact of this decision, the RBI Governor has signalled that this move may only provide temporary relief and may be necessary to combat the inflationary growth in the country. However, we hope that interest rates will remain in single digits, which would be favourable for the real estate sector in India. Overall, this decision is likely to stabilise the real estate sector in the short term.
Achala Jethmalani, Economist at RBL Bank: The policy appears to be a hawkish pause as the MPC turns data dependent whilst it awaits the monetary efficacy from prior rate hikes to play out into the deposit and lending rates. With the Governor stating that today’s pause on policy rates is for this policy only, it has the elbow room to act on rates if inflation readings surprise on the upside. Basis the current growth-inflation dynamics and the global backdrop, the Repo Rate is likely to peak out at 6.50-6.75% with a possibility of a final 25bps to be delivered in 1H FY24.
Manoj Gaur, president, CREDAI NCR; CMD, Gaurs Group: In the past RBI increase of rate, 6 times consecutively was creating a negative impact on potential buyers. If the interest rates are kept at this level for at least 2 quarters the market sentiments will further boost because buyers will have no financial worries and the fear of having to pay higher interest on the home loan. Stable repo rates would allow investors to put their money into the developments even more conveniently.
Amit Modi, director, County Group & president Credai (WUP): The recent increases had, in some way, put investors in a bind. The real estate sector would continue to thrive as the middle-income groups can invest in the sector without the fear of having to pay higher interest on home loans. Due to the accessibility of quality facilities and amenities, demand has been extraordinarily high in both the residential and business sectors. Investors could invest in the projects even more easily if repo rates remained stable.
Sanjay Sharma, director, SKA Group: The RBI’s choice to maintain the repo rate after six straight increases has helped to facilitate change in the real estate industry. We applaud this shift in policy direction. The decision to reduce the repo rate was not made in the manner we had anticipated. The RBI’s decision to at least pause the repo rate after a year and refrain from voting in support of another increase is well-intentioned for the housing market and homebuyers.
Amit Jain, director, Mahagun Group: In recent years, interest rates have increased considerably. Even though the world’s top economies continue to increase interest rates, the current situation, in which the RBI made the courageous decision to keep interest rates unchanged, presents a good option for investors and people who want to purchase or invest in a house. By keeping the interest rate constant, the Indian market becomes considerably more competitive and alluring on a global scale. This could lead to increased foreign direct investment (FDI) into India.
Nayan Raheja, Raheja Developers: The real estate sector was expecting the RBI not to go for another hike, and we are happy that the RBI body has considered our demands and not go for another surge if pertinacious to not reduce the repo rate as well. We expect that it would be a crucial factor in springing the real estate buoyancy and homebuyers’ demand.
Deepak Kapoor, director, Gulshan Group: The RBI’s decision to keep the repo rate unchanged after six consecutive hikes prove to be good in facilitating change for the real estate sector. We welcome this change in policy stance. The decision was not along the lines of our expectations to lower the repo rate. The sheer fact that after a year, the RBI has atleast decided to put a pause on the repo rate and not vote in favour of another hike is well-meaning for the real estate sector and homebuyers.
Narayan Bhadana, MD, 4S Group: It was, however, surprising to a certain extent as the industry speakers were anticipating another repo rate hike of 25 bps. However, the RBI made a wise call and decided to keep the repo rate unchanged. The decision also hints towards the changing RBI’s ideological dispensation. It is now shifting from an anti-inflationary thought guideline to an industry revival policy stance. We hope that the RBI now ruminates over reducing repo rates to bolster housing demand.
Ashwani Kumar, Pyramid Infratech: The move will alleviate the concerns of homebuyers who are not happy with the constant quarter-to-quarter elevation in home prices and bank home loan mortgage rates. It will also relieve real estate developers facing the heat of stalled projects and high construction material costs. The decision is not precisely the distillation of our demands but has also given us hope that the RBI will refrain from going for a series of repo rate hikes, given compressed inflationary challenges.
Ankit Kansal, founder and MD, Axon Developers: RBI has increased the repo rate over six iterations in the past. However, this time around it has kept it unchanged underscoring healthy macroeconomic sentiments and a rate of inflation which is within the danger zone. Indian economy is looking healthy bolstered by growth in the job market, a jump in exports, and overall healthy rates of spending. This has led the RBI to rethink its strategy and keep the repo rates unchanged. This will also help the home loan rates stay stable and give a boost to otherwise buoyant housing demand. Meanwhile, it is important for the government to carefully and chalk out a more nuanced approach in terms of better incentives for homebuyers such as stamp duty reduction, higher tax benefit brackets for home loan interest, and lowered rate of GST, etc. This will not just help the realty sector and millions of Indian homebuyers but also support 250 allied industries, thereby the positive impact cascading all around.
Abhishek Kapoor, CEO, Puravankara: The Reserve Bank of India’s (RBI) decision to not increase the repo rate is a welcome move. While the demand continues to be strong as of today, the pause will reaffirm the interest of homebuyers in the affordable and mid-segment categories.
While the rate hikes have not affected demand sentiments so far, today’s decision will further help boost demand in real estate which is the growth engine of the economy.
Shiv Parekh, founder, hBits: It was important that the RBI evaluated the cumulative effects of the past hikes. Keeping the repo rate unchanged at 6.50% will add a wave of relief across industries especially the real estate sector; the sector has been in distress due to successive hikes for the last six months. Most industries were affected due to the high rate of working capital and real real estate was no exception.
There needs to be a balancing act for growth along with tightening monetary policy to tame inflation. At this point of time, it was important to hold the rates. This will definitely act as the boost needed by the sector. Inflation has been high due to external factors as well. Now businesses will be able to generate more employment opportunities due to the growth effected through easy money availability.
Dr Mohit Ramsinghani, chief of sales, Runwal: As we enter the new fiscal, the pause in repo rate hike is very positive news for the real estate sector. This will create positive consumer sentiment & momentum for real estate. With Akshay Tritiya coming soon as the mostauspicious occasion to buy a home, the RBI repo rate hike pause has added cherry to the cake. The demand was already robust, this move will make all the fencesitters to come ahead and finalize their decision to buy a home.
Santosh Agarwal, CFO and executive director, Alpha Corp: After a string of increases, the RBI’s decision to maintain the repo rate constant is a welcome reprieve. This announcement will undoubtedly boost market sentiment after the union budget and boost the housing segment. The real estate sector has experienced significant growth during the past few quarters. Maintaining the accommodating position would allow banks to continue lending mortgages at the present rate, which is very encouraging for homebuyers’ and developers alike.
Jatin Lohia, director, LID: The RBI’s decision to retain the repo rate at 6.50% in the face of persistently high inflation reflects a cautious posture intended to strike a balance between growth and price stability. However, given the Government’s growth-focused fiscal budget announcement earlier this month, as well as the optimistic market sentiments, it is clear that demand for housing will skyrocket in the coming months.
Parvinder Singh, CEO, Trident Realty: We welcome the RBI’s decision to keep the repo rate unchanged at 6.50%. The real estate sector is prone to the quick impact of interest rate movements and in the rising interest rate cycles, the unchanged repo rate is likely to keep the homebuyers’ sentiment intact further helping to maintain the sustained growth momentum. The real estate sector is witnessing a healthy growth cycle and with the government’s supportive approach, we expect the market sentiments to remain upbeat.
Atul Banshal, director, finance, Omaxe: This is the first bi-monthly monetary policy review in the new financial year and the realty sector was hoping for the RBI to pause the repo rate hike. Keeping the repo rate unchanged at 6.50 percent is a supportive move of RBI for rate-sensitive businesses. We expect the economic conditions to remain stabilised to a large extent and inflation is also expected to remain range bound in the coming months with a positive outlook. The unchanged repo rate is likely to offer a sense of encouragement for millions of homebuyers and will help maintain the current growth momentum in demand and sales of housing units. Despite the rate hikes in the past, the housing segment has successfully maintained demand momentum across price points. With a long-term perspective focusing on broader economic indicators and market conditions, RBI’s stance on unchanged rates offers a balanced outlook.
Pradeep Aggarwal, founder & chairman, Signature Global: The RBI’s choice to leave policy rates unchanged is a significant relief for prospective homebuyers, as well as for supply-side stakeholders. The past three quarters have seen a gradual rise in home loan interest rates, causing a significant impact on borrowers as rates have surged to over 9%, marking a 40-50% increase from their historical low. Any additional policy rate hike could push home loan interest rates even closer to the psychological threshold of 10% per annum, creating a substantial impact on buyer sentiments and affordability. Given the increase in home loan interest rates, we strongly encourage state governments to provide some relief to homebuyers by offering stamp duty rebates or registration fee waivers. Such measures would help mitigate the financial burden on buyers and make homes more affordable for those looking to buy their home.
Pritam Chivukula, co-founder & director, Tridhaatu Realty and treasurer, CREDAI MCHI: Keeping the repo rate unchanged at 6.50 per cent is a good decision taken by RBI. This will help keep inflation in check and improve market sentiments, which is the need of the hour. This is a big booster for the real estate sector which was overlooked in the recently concluded budget. We can look forward to seeing resurgence for real estate demand. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to further boost the sentiments.
Himanshu Jain, VP, sales, marketing and CRM, Satellite Developers: Keeping the current market conditions and inflation in mind, the move by the RBI to keep the repo rate unchanged is a welcome one. This will help in keeping the economy on track and controlling inflation. We expect demand for housing to rise, more stability to property prices coupled with market sentiments improving. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and this move will have a positive impact on a buyer’s decision.
Bhushan Nemlekar, director, Sumit Woods: A good decision by RBI to keep the repo rate unchanged at 6.50 per cent. This will positively impact the entire real estate spectrum and value chain. Demand for housing will go up and the momentum that we were seeing in the last couple of quarters will continue.
Rahul Thomas, whole-time director, Suraj Estate Developers: The RBI’s decision to pause the repo rate hike is a positive development for the housing market and real estate developers. It demonstrates the central bank’s commitment to carefully evaluate the inflationary challenges and their potential impact on the economy. If the RBI had proceeded with further rate hikes and increased costs, it would have had a detrimental effect on consumer spending and slowed down the demand in the real estate industry. This pause in the repo rate hike provides much-needed breathing space for the industry to revitalize itself, free from the burden of escalating borrowing costs for developers.
Sandeep Runwal, president, NAREDCO Maharashtra: The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is a welcome move signaling that interest rate hikes could be over. Also, time to balance growth and inflation. This will certainly positively impact the rate sensitive segments of affordable and low-income group housing. Keeping the repo rate unchanged will help in offsetting the rising property rates and will reduce home buyers’ burden to a large extent. Real estate industry is linked with several other allied industries and therefore it impacts the entire economy. We urge the government to offer relaxations in stamp duty fees that it offered at the time of the pandemic so as to further encourage homebuyers’ interest in property buying.
Rajan Bandelkar, president NAREDCO: By keeping the policy repo rate unchanged, the RBI has provided a much-needed boost to the real estate industry, which is already witnessing positive momentum. This decision offers stability and certainty to developers, investors, and homebuyers, and can further stimulate demand for housing loans. As a result, the industry can keep the positive momentum alive and continue to contribute to the overall economic growth of the country.
Dr Niranjan Hiranandani, vice chairman NAREDCO: In contrast to the World Bank, India Inc. applauds the RBI’s decision to pause the rate hike cycle. This act of relief will restore confidence in homebuyers’ sentiment and boost demand rally in real estate. The industry body now calls for fiscal intervention from the Government of India to cool the inflationary heat caused by persistent geopolitical turbulence caused by the collapse of foreign banks, supply chain challenges, and global financial instability. Additionally, devising innovative flexi or step-up EMI schemes by the banks and FIIS will be conducive for the market players to onboard new home buyers in the high-interest rate regime.
Ashish Narain Agarwal, founder & CEO, PropertyPistol: The residential market’s winning streak continued in the first quarter of 2023 despite the hike in interest rates over the past year. India’s housing sector is witnessing possibly the biggest boom in the last decade, driven by various factors such as affordability, lifestyle upgradation and aspiration of customers to own homes and we see this up-cycle continuing in 2023.
Ramani Sastri, chairman & MD, Sterling Developers: Fuelled by both end-user and investor interest, the real estate market has shown resilience where buyers are carefully filtering out projects and looking for the right product mix in terms of affordability, accessibility and quality of living. Hence, in such a context, we welcome the decision of RBI to maintain the status quo. Home loan interest rates are already at an alarmingly higher level of 9.5 per cent and above due to the increase in repo rates in the recent past. Another increase in policy rates means that interest rates on home loans may hit an all-time high and touch almost double-digit, which could have a substantial impact on buyer sentiments and affordability. However, a cut in the key rates going forward would be widely appreciated as low-interest rates have played a crucial role in the revival of overall real estate demand and improvement in the liquidity situation, which is vital for the sector.
Lincoln Bennet Rodrigues, chairman & Founder, The Bennet and Bernard Company: However, the hike will not have significant impact on the luxury housing as the demand of home buyers in this segment is beyond these considerations. With the growing economy and an increasing number of high-net-worth individuals, the demand for luxury properties has seen exponential rise as the next generation of homebuyers are now looking for integrated gated communities that deliver on an assortment of modern amenities. We have seen significant increase in demand for high-end residential properties such as villas in suburban regions and vacation homes in places like Goa. The rich are looking at residential real estate as a favourable avenue for end use as well as an investment due to high returns. Also, millennials’ growing purchasing power and higher disposable income is further stimulating the demand for lavish living. The aspirational middle-class millennials and Gen-Z are also emerging as key drivers of the realty economy. Overall, this upsurge in demand for high-end properties is a testament to the enduring appeal of luxurious living.
Anuj Puri, chairman, Anarock Group: This is indeed good for the residential real estate market, which faces a tough road ahead amid massive layoffs by large corporates the world over. India is not decoupled from global economic dynamics and their invariable impact on the housing uptake here. The RBI’s decision to keep the repo rates unchanged comes as a welcome respite to homebuyers. This particularly gives relief to affordable and mid segment homebuyers who feared a possible rate hike today, making property buying via home loans even harder. As is, affordable housing has been under stress since the pandemic. This segment (units priced <INR 40 lakh) saw its overall sales share dip between 2019 and 2022 and further in Q1 2023. ANAROCK Research indicates that back in 2019, out of the total sales of nearly 2,61,400 units across the top 7 cities nearly 38% sales were in the affordable segment.
Manju Yagnik, vice chairperson, Nahar Group; senior VP NAREDCO-Maharashtra: We appreciate that the RBI has not altered the REPO rates. After a time of turmoil, the market has remained calm, and this decision will be a huge relief for homebuyers. There is a growing demand for real estate, and consumers want to purchase properties from reputable developers. This decision demonstrates the strength and stability of the Indian economy, which will entice more people to buy homes and fulfil their real estate dreams. We believe that in future the central bank will think about lowering the REPO rates, which would be a huge relief for homebuyers.
