RBI MPC 2024: Real Estate Developers Call For Repo Rate Reduction To Spur Housing Demand
RBI MPC 2024: Realty sector is expected to continue its growth trajectory, with increased investments due to its relative stability and higher returns compared to other investment markets
RBI MPC 2024: The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5 per cent, marking the eighth consecutive time the central bank has maintained this rate. This decision, announced on Friday, is expected to provide a significant boost to the Indian real estate sector by ensuring home loan interest rates remain stable and affordable for potential buyers.
According to Anarock Group, the RBI's decision will help maintain low borrowing costs, benefiting both developers and homebuyers by enhancing market confidence and predictability. Anuj Puri, Chairman at Anarock Group, highlighted that this policy continuity supports sustained demand, particularly in the mid-range and premium property segments, which together account for over 55 per cent of the current supply. In the first quarter of 2024 alone, these segments recorded nearly 76,555 units sold, representing nearly 60 per cent of total sales.
The RBI paused its rate increase cycle in April last year after six consecutive hikes totaling 250 basis points since May 2022. RBI Governor Shaktikanta Das, while announcing the second bi-monthly monetary policy for the current financial year, said that the Monetary Policy Committee (MPC) will continue to monitor inflation, particularly elevated food inflation, amid expectations of a normal monsoon.
Puri noted that while stable home loan rates are crucial, additional government incentives are necessary to invigorate this segment.
Realtors apex body CREDAI National President Boman Irani said the country achieved high economic growth in the last fiscal on contributions from all sectors, including real estate. "Coupled with other healthy macro-economic indicators and CPI at an 11-month low at 4.83 per cent recorded in last April, RBI possesses a strong opportunity to provide a sustained, formidable platform to further elevate this holistic economic development across industries," he said.
Real estate firm Signature Global Chairman Pradeep Aggarwal said the RBI held rates steady for the eighth time in a row, likely due to high food inflation despite overall CPI falling within their target range. "Economists anticipate rate cuts of 25-50 basis points in the second half of the fiscal year if inflation keeps declining. Lower interest rates could further boost the real estate sector, which is already experiencing strong market demand from end-users," Aggarwal said.
Ramani Sastri, Chairman and MD at Sterling Developers, echoed the sentiment, stating that the RBI's status quo stance would bolster overall market confidence. He pointed out that stable home loan rates enhance consumer confidence and facilitate informed investment decisions, particularly as homebuyers increasingly prioritise long-term returns from residential real estate investments. Sastri also suggested that a future repo rate cut would further boost homebuyer sentiment and affordability, crucial factors for the housing market.
The real estate sector is expected to continue its growth trajectory, with increased investments due to its relative stability and higher returns compared to other investment markets. Sastri expressed hope that the government would focus on infrastructure development, lowering home loan interest rates, prioritising tax incentives, easing regulatory constraints, and streamlining approval processes to foster overall growth in the real estate sector.
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