RBI Reduces Repo Rate, Impacting Real Estate Sector
The Reserve Bank of India (RBI) has reduced its key policy rates, a move met with varied reactions from the real estate sector. The central bank decreased the repo rate, the rate at which commercial banks borrow from the RBI, by 0.25%, bringing it down to 7.25%.
RBI slightly cut the key rates.
While realtors expressed their approval of the rate cut, some industry figures argue that the decrease is insufficient to stimulate substantial growth. They suggest that a more significant reduction would be necessary to truly invigorate home sales and benefit both homebuyers and builders alike. This view stems from the belief that lower interest rates, achieved through further rate cuts, would make home loans more accessible and consequently boost buyer confidence. The reduced financial burden of EMIs resulting from lower repo rates would further encourage buyer activity.
Former CREDAI chief Lalit Kumar Jain emphasized the prospective advantages for common house buyers from this repo rate reduction.
Developers seek more rate cuts from RBI.
However, the RBI's decision generated mixed responses within the developer community. DLF, a prominent real estate developer in India, contended that the marginal 0.25% decrease will not significantly impact the sector. Rajeev Talwar, Executive Director of DLF Group, advocated for a more substantial reduction to stimulate both the overall economy and the real estate segment, asserting that the current rate cut is inadequate to achieve meaningful progress.
"The rate cut is very so small that it is insufficient to boost either economy or realty."
This perspective was echoed by Sachin Sandhir of RICS (Royal Institution of Chartered Surveyors), who also believes a larger rate cut would be required to truly benefit the real estate field. In contrast, Assotech MD Sanjeev Srivastva views the reduction as a positive development for the sector and expressed hope that these benefits would be extended to customers by financial institutions.
"Commenting on the rate cut, realtors said that the interest would have gone down if the reduction rate was further lowered. A further reduction would necessarily boost the home sales. Home loans will be lowered. This will boost the sentiments of the buyers."
"Along with the buyers, the builders also will benefit from further rate cuts. If the repo rates are further revised, it will bring the EMIs down."