The Union budget may have disappointed those seeking relief under the income tax slabs, but the latest decision by the Reserve Bank of India (RBI) surely put a smile on the face of potential buyers of houses in the country.
As the RBI’s Monetary Policy Committee (MPC) decides to keep the repo and reverse repo rates unchanged, property developers across the country are now anticipating a further surge in demand for residential accommodation.
Following the three-day bi-weekly MPC meeting, the committee kept the repo and repo rates unchanged at 4% and 3.35%, respectively. What this essentially means for loan seekers is that banks and other financial lenders are likely to keep interest rates on loans intact. According to industry experts, this will be more beneficial for the housing sector as buyers would benefit from a lower interest rate on home loans.
Currently, interest rates offered by most major banks and non-bank financial institutions are between 6.4 and 6.9%, the lowest in years. And today’s decision is likely to keep rates intact – encouraging more fence keepers to take the plunge.
According to Amit Modi, director of ABA Corp and president-elect of CREDAI Western UP, this would be helpful for the real estate sector along its road to recovery. “We need to understand that this industry does not function alone but depends on the growth of all associated industries. The dovish stance taken by RBI will boost the economic environment and lead to a favorable situation for stakeholders (including homebuyers),” he said.
Ashwinder R. Singh, CEO-Residential, Bhartiya Urban Infrastructure and Land Development Company, said, “It remains positive for the real estate sector, “especially for buyers who can still afford new homes due to low rental rates. interest on home loans.
“The housing market has shown a healthy rebound from the covid crisis and low interest rates will help improve affordability and maintain growth momentum. Sustained housing market recovery will have a strong multiplier effect on overall economic growth,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.
According to him, the low interest rate regime has helped revive the real estate sector over the past six quarters. “RBI’s efforts, along with other demand stimulus measures, have helped reinvigorate demand that had been languishing for nearly 7 years before 2020. Continuing the dovish stance will help advance the sector’s cause,” he added.
Welcoming the RBI’s decision, Anuj Puri, Chairman of ANAROCK Group, however, warned that the rate cut may not last long, implying that people looking to buy a home should not wait. “While the window of opportunity for homebuyers to benefit from low interest rates has been extended for some time, it is unlikely to prevail any longer – sooner or later repo rates will rise.”
According to Ramesh Nair, CEO, India and Managing Director, Market Development, Asia at Colliers, the move is a respite for the property industry. “Absent specific demand-side interventions in the 2022-23 budget, potential buyers may continue to benefit from lower home loan interest rates that are here to stay for now.”
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