New Delhi, Aug 6: Real estate industry on Friday welcomed the RBI’s decision to keep key policy rates unchanged, saying low interest rates will boost home buying sentiment and drive demand especially during the upcoming festival season.
However, builders demanded that steps should be taken to enhance liquidity in the real estate sector.
The Reserve Bank of India (RBI) expectedly kept interest rates unchanged at a record low as it chose to support economic revival over inflation. The reduction in repo rate by 250 basis points since February 2019 has resulted in a cumulative decline by 217 basis points in the weighted average lending rate (WALR) on fresh rupee loans.
Commenting on the monetary policy, CREDAI National President Harsh Vardhan Patodia said: “With the outbreak of the second wave and the fear of a third wave, RBI’s guarded move to hold the repo rate at 4 per cent reflects the continuation of its accommodative stance ensuring the lowest lending rates to keep business operational across sectors.”
“We are optimistic that home loans will continue to be affordable, thereby propelling the growth of the housing segment,” he added.
Naredco President Niranjan Hiranandani said the low interest rate will augment the home buying sentiment and facilitate financial cushion to log the deals in backdrop of festive tailwinds.
“Also, if regulators can enhance credit supply to the stalled projects via permitting more SWAMIH funds; will go a long way in resurrecting the prolonged sluggish real estate market and ensure customer delivery,” he added.
Among developers, Bengaluru-based Puravankara Ltd MD Ashish R Puravankara said the continued accommodative stance by RBI to keep the REPO rates unchanged has been a catalyst for the revival of the real estate sector. “The decadal low-interest rates have helped sustain homebuyers’ interest in the residential segment, positively impacting the overall demand over the last two quarters.”
With home loans still remaining at bottom levels, Sunteck Realty CMD Kamal Khetan believed that the buying activity would soon be accelerated by those who have not used this favourable scenario to their advantage yet.
Gaurs group CMD Manoj Gaur said there was expectation of sector-specific measures that could trigger healthy growth. “The upcoming festival season will likely bring in more demand, and we are hopeful that the low home loan interest rate will make the buyers go for real estate assets,” he added.
Gurugram-based Experion Developers CFO Atul Banshal said the RBI policy would continue to support the low interest rate environment. He hoped that banks will transmit the benefits of low interest rate and liquidity in its onward lending to the sector.
Runwal group MD Sandeep Runwal said it was imperative that low mortgage rates continue for at least some more time now or maybe until the end of the year, while Sterling Developers CMD Ramani Sastri said a cut in rates could have sent positive signals to the industry and bolstered greater demand for homes.
Poddar Housing and Development MD Rohit Poddar felt that more efforts were needed to restore the supply-demand balance in the real estate sector but continuation of lowest lending rates will help builders in facing the challenges.
Property consultants, too, hailed the RBI policy and hoped that low interest rates on home loans would drive demand in the upcoming festival season.
Anarock Chairman Anuj Puri said: “The unchanged repo rate regime works well for home loan borrowers as the floating retail loan rates have been at the lowest level in the last two decades. The continuation of this low interest rate regime supports the environment of affordability which has become the new hallmark of the housing market – during the pandemic, and even before.”
Keeping interest rates benign will keep the housing momentum going, said Amit Goyal, CEO, India Sotheby’s International Realty.
Knight Frank India CMD Shishir Baijal said the extended period of historic low interest rates would ensure home loan rates remain at current benign levels and aid the revival of the real estate sector.
Vikas Wadhawan, Group CFO, Housing.Com and PropTiger, said the decision augurs well for the industry in general and home buyers in particular, since the record low interest rate regime would enable a large number of buyers to invest in property.
Square Yards Co-founder and CFO Piyush Bothra said the RBI’s decision to maintain the repo rate status quo is a strong signal that growth is important. The soft interest rate environment will benefit home loan borrowers and sustain homebuying sentiments that have picked up post the second covid wave, he added.
Samantak Das, Chief Economist and Head Research at JLL, said that prevailing lower home loan rates, stable prices and attractive payment plans and schemes of developers are aiding the translation of pent-up demand into sales.
Investors Clinic founder Honeyy Katiyal said the festival season is the make and breaks for the housing segment and some rate cut no doubt would have sent a strong signal to the investors and buyers, but unchanged rates is also a welcome step.
Kaushal Agarwal, Chairman of The Guardians Real Estate Advisory, said the banks should now further sweeten the lending rates, at least till such time that the economy gets back to the pre-COVID levels.
OwnersTown CEO Abhishek Jindal said termed it as good news for aspiring homebuyers who can leverage the prevailing low home interest rates to buy flats. (PTI)
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