Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) in its resolution of April 6, 2023, decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. Along with this, according to MPC real GDP growth for 2023-24 is projected at 6.5 per cent with Q1:2023-24 at 7.8 per cent; Q2 at 6.2 per cent; Q3 at 6.1 per cent; and Q4 at 5.9 per cent, with risks evenly balanced. The entire MPC resolution can be seen here. Following are the India Inc. reactions to this announcement as they spoke to Team Estrade. These are from the Real Estate industry space.
Sandeep Runwal – President, NAREDCO Maharashtra
“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is a welcome move signaling that interest rate hikes could be over. Also, time to balance growth and inflation. This will certainly positively impact the rate sensitive segments of affordable and low-income group housing. Keeping the repo rate unchanged will help in offsetting the rising property rates and will reduce home buyers’ burden to a large extent. Real estate industry is linked with several other allied industries and therefore it impacts the entire economy. We urge the government to offer relaxations in stamp duty fees that it offered at the time of the pandemic so as to further encourage homebuyers’ interest in property buying.”
Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
“Keeping the repo rate unchanged at 6.50 per cent is a good decision taken by RBI. This will help keep inflation in check and improve market sentiments, which is the need of the hour. This is a big booster for the real estate sector which was overlooked in the recently concluded budget. We can look forward to seeing resurgence for real estate demand. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to further boost the sentiments.”
Anuj Puri, Chairman – ANAROCK Group
Much against general expectations, the RBI decided to keep the repo rates unchanged at 6.5% today. This is indeed good for the residential real estate market, which faces a tough road ahead amid massive layoffs by large corporates the world over. India is not decoupled from global economic dynamics and their invariable impact on the housing uptake here. The RBI’s decision to keep the repo rates unchanged comes as a welcome respite to homebuyers.
This particularly gives relief to affordable and mid segment homebuyers who feared a possible rate hike today, making property buying via home loans even harder. As is, affordable housing has been under stress since the pandemic. This segment (units priced <INR 40 lakh) saw its overall sales share dip between 2019 and 2022 and further in Q1 2023. ANAROCK Research indicates that back in 2019, out of the total sales of nearly 2,61,400 units across the top 7 cities nearly 38% sales were in the affordable segment.
But in 2022, out of the total 3,64,880 units sold across the top 7 cities altogether, about 26% were in the affordable category. There has been a further dip in overall sales share in Q1 2023, as well. Out of total 1.14 lakh units sold in the top 7 cities in Q1 2023, affordable housing comprised just 20% share (or. approx. 23,110 units sold).
It bears keeping in mind that after the remarkable performance in Q1 2023, the housing market is now staring at major headwinds with layoffs, rising property prices, etc. which will pose a challenge in the short-term. The respite of home loan rates remaining unchanged is therefore very welcome.
Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate
“The RBI’s decision to keep the repo rate unchanged was a much-needed respite for the real estate sector. This decision will provide stability in the home loan category and keep the EMIs unchanged. It will maintain the buying sentiment in the real estate sector and may lead to an upsurge in the mid-segment housing category. We also expect the demand for luxury and premium housing to remain unaffected. Despite the positive impact of this decision, the RBI Governor has signalled that this move may only provide temporary relief and may be necessary to combat the inflationary growth in the country. However, we hope that interest rates will remain in single digits, which would be favourable for the real estate sector in India. Overall, this decision is likely to stabilise the real estate sector in the short term.”
Bhushan Nemlekar, Director, Sumit Woods Limited
“A good decision by RBI to keep the repo rate unchanged at 6.50 per cent. This will positively impact the entire real estate spectrum and value chain. Demand for housing will go up and the momentum that we were seeing in the last couple of quarters will continue.”
Samyak Jain, Director, Siddha Group
“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is in line with consumer sentiments. The real estate sector will see increased demand for housing whilst keeping inflation in check. This would also help in bringing more liquidity into the sector thus balancing growth.”
Kairav Shah, Chief Sales Officer, Labdhi Lifestyle
“The RBI’s decision to leave the repo rate unchanged at 6.50 per cent will surely help market sentiments to soar. This will keep inflation in check, improve housing demand and enhance growth of the sector. This will offset the huge financial burden on home buyers and will now see home buyers actively seeking to buy their desired home.”
Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL)
“Keeping the current market conditions and inflation in mind, the move by the RBI to keep the repo rate unchanged is a welcome one. This will help in keeping the economy on track and controlling inflation. We expect demand for housing to rise, more stability to property prices coupled with market sentiments improving. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and this move will have a positive impact on a buyer’s decision.”
Ramani Sastri – Chairman & MD, Sterling Developers
The RBI’s decision to hold rates is welcome as this will enhance buyers’ confidence especially after repeated hikes had already increased their acquisition cost. The past few months have been testament to the fact that home buyer confidence is at an all-time high and are able to make confident purchase decisions.
The residential market’s winning streak continued in the first quarter of 2023 despite the hike in interest rates over the past year. India’s housing sector is witnessing possibly the biggest boom in the last decade, driven by various factors such as affordability, lifestyle upgradation and aspiration of customers to own homes and we see this up-cycle continuing in 2023.
Fuelled by both end-user and investor interest, the real estate market has shown resilience where buyers are carefully filtering out projects and looking for the right product mix in terms of affordability, accessibility and quality of living. Hence, in such a context, we welcome the decision of RBI to maintain the status quo.
Home loan interest rates are already at an alarmingly higher level of 9.5 per cent and above due to the increase in repo rates in the recent past. Another increase in policy rates means that interest rates on home loans may hit an all-time high and touch almost double-digit, which could have a substantial impact on buyer sentiments and affordability.
However, a cut in the key rates going forward would be widely appreciated as low-interest rates have played a crucial role in the revival of overall real estate demand and improvement in the liquidity situation, which is vital for the sector.
There is also great confidence in real estate as an asset class compared to other asset classes today and in the long term, we expect markets will see sustained growth. With recovery of the economy, we expect that the real estate sector will contribute a substantial share to overall economic development.
Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury themed homes in Goa
“We welcome this move by RBI as it helps in holding the interest rates and sustaining the growth momentum in the real estate sector. Rising interest rates have certainly impacted the sales of rate-sensitive segments of affordable and mid segment housing. However, the hike will not have significant impact on the luxury housing as the demand of home buyers in this segment is beyond these considerations. With the growing economy and an increasing number of high-net-worth individuals, the demand for luxury properties has seen exponential rise as the next generation of homebuyers are now looking for integrated gated communities that deliver on an assortment of modern amenities. We have seen significant increase in demand for high-end residential properties such as villas in suburban regions and vacation homes in places like Goa. The rich are looking at residential real estate as a favourable avenue for end use as well as an investment due to high returns. The surge in demand for luxury housing is a clear indication that people are looking for a lifestyle that mirrors their achievements and ambitions. Also, millennials’ growing purchasing power and higher disposable income is further stimulating the demand for lavish living. The aspirational middle-class millennials and Gen-Z are also emerging as key drivers of the realty economy. Overall, this upsurge in demand for high-end properties is a testament to the enduring appeal of luxurious living. As buyers become progressively more discerning in their choices for a signature style of living, they will be more willing than ever before to take the leap and purchase luxurious homes. The unique blend of themed homes, lavish amenities, and unparalleled exclusivity that luxury properties offer will continue to be a compelling draw for the most discerning buyers and this trend is expected to continue in 2023 given change in lifestyles.”
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