RBI Cuts Repo Rate: Boost for Housing Demand

New Delhi, Feb 7 (PTI) Real estate developers hailed the RBI's decision to cut the benchmark lending rate by 25 basis points, saying this will benefit existing home loan borrowers and also encourage the fence sitters to invest in residential properties.

Realtors' apex body CREDAI feels that the RBI's decision might have a "limited direct impact" on the sector and made a case for further reduction for "stronger impetus" to housing demand.

Another leading association Naredco said the RBI's move to slash the repo rate by 25 basis points to 6.25 per cent could lead to lowering of interest rates on home loans, which in turn will boost housing sales.

CREDAI National President Boman Irani said, "The RBI's decision to reduce the repo rate supplements recent announcements in the budget aimed at boosting spending and spurring economic growth."

"While the current cut may have a limited direct impact, we anticipate that a further rate cut in the next MPC (monetary policy committee) meeting will provide stronger impetus to overall demand, accelerating housing sales, particularly in the mid-income and affordable segments," Irani observed.

Naredco national president G Hari Babu said the rate cut will have a positive impact on the real estate sector, making home loans more affordable and increasing demand for housing.

"With lower interest rates, we expect to see increased sales, improved liquidity, and a reduction in the inventory of unsold homes. This, in turn, will encourage developers to launch new projects," he added.

Domnic Romell, President of CREDAI-MCHI, said the rate cut, combined with the increase in the income tax exemption limit to Rs 12 lakh, creates an environment that encourages consumer spending and home ownership.

Prashant Sharma, president of Naredco-Maharashtra, expected banks to ensure swift transmission of the reduced rates.

Among developers, Tata Realty and Infrastructure MD and CEO Sanjay Dutt said, the RBI's decision would make home loans more affordable, thus easing the financial burden on aspiring homeowners.

Dutt said the rate cut will immensely benefit the affordable housing segment, especially in Tier 2 and Tier 3 cities.

Venkatesh Gopalakrishnan, Director Group Promoter's Office and MD of Shapoorji Pallonji Real Estate, said, "This thoughtful step highlights the central bank's commitment to bolstering economic growth while fostering a favourable environment for investors and homebuyers."

For the realty sector, he said, this development is a significant boost, particularly for affordable and mid-segment housing.

Among Delhi-NCR builders, Gaurs Group CMD Manoj Gaur said the decision will definitely infuse positive sentiments in the real estate sector.

Signature Global Chairman Pradeep Aggarwal said this move will positively impact the real estate sector as well as allied industries such as cement, steel, and construction materials, creating a multiplier effect on employment and overall economic activity.

Real estate consultants termed the decision as timely and prudent.

Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, "This much-awaited move by the RBI is poised to significantly boost the housing segment by stimulating demand, particularly among first-time buyers."

Housing brokerage firm Anarock Chairman Anuj Puri said, "It is undeniably a major boost to the homebuyers, particularly for affordable housing buyers."

"Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce - as long as banks pass on the key benefits to buyers," Puri added.

Dhruv Agarwala, Group CEO of Housing.com & Proptiger, said, the RBI's decision is both well-timed and prudent. "At this juncture, in fact, the rate cut will play a crucial role in improving housing affordability," he added.

Magicbricks CEO Sudhir Pai said this will help enhance affordability and stimulate housing demand.

Amit Goyal, MD of India Sotheby's International Realty, said the RBI's rate cut after five long years is the much-needed oxygen for the Indian economy, more particularly for the real estate sector.

Garvit Tiwari, Director of InfraMantra, said, "Declining urban consumption is a cause for concern and with this cut, some reversal is likely in the coming quarters".