Real Estate Reactions on Repo Rate Hike

The RBI has raised repo rates for the fifth time in a row. This time, the difference is 25 basis points, causing the interest rate to rise from 6.25 to 6.50. For the previous few months, the RBI has announced the smallest feasible increases in repo rates to combat the inflation the country is experiencing due to global trends. Though this increase would cause home loan interest rates to rise, the real estate market is predicted to remain strong because the sector is thought to give superior returns on investment compared to other businesses.

Ankit Kansal, MD & Founder, Axon Developers
"The current decision by the RBI to hike the repo rate by 25 basis points is on the expected lines. The global economic outlook has improved, yet the uncertainties persist. Besides geopolitical threats and market volatility, the prices of petroleum and non-oil commodities are increasing, which will weigh on the global economic growth. This can impact inflation, which already is rising high in India. Thus increase in rates makes perfect sense as the objective should be to strike the right balance between growth and inflation. Meanwhile, the government has to understand the economic significance of the realty sector, which not just constitutes 8% of the GDP but also is the second most employment generator after agriculture. Any possible growth in home loan rates needs to be balanced with incentives and policies to reduce the cost of construction and incentivize sales. Initiatives such as rationalization of GST rates, reduction in stamp duty, lowering of capital gain taxes, and increase the income tax waivers on home loan interests can directly accelerate the overall property market. Even if the governing agencies identify one or two such initiatives and execute them, it will positively impact the overall industry."

Ashwani Kumar, Pyramid Infratech
"RBI has made a smart move by announcing a minimal increase of 25 bps in repo rates leading it to 6.50%. Though the hike is a bit disheartening as no major push was given to the real estate sector in the Union budget, the market trends are expected to keep the popularity of projects going upwards. The continuous hikes in repo rates have resulted in an increase in home loan interest rates. However, buyers’ incline has been towards both residential and commercial projects, stabilizing the real estate sector. RBI is striving to balance global inflation with repo rates, and the hikes are expected to be halted anytime soon in future."

 

Narayan Bhadana, MD, 4S Developers
"The RBI has announced another 25 basis point increase in repo rates, in an effort to reduce inflation. The increase in repo rates from 6.25% to 6.50% is fairly minimal and may be easily curtailed because it is still quite low in comparison to other parts of the world experiencing a similar situation. The hike was widely anticipated, and the RBI handled it admirably by only making a little adjustment. This may have a short-term impact on homebuyers, but it will have a long-term favourable benefit. The real estate sector has been performing well as a result of a high demand for Grade A developments, and this trend is projected to continue."

 

Rajesh K. Saraf, Managing Director, Axiom Landbase Pvt Ltd
"The RBI's small raise in repo rates of 25 basis points was widely anticipated, and the organisations handled it properly, avoiding any significant variation in total value. Middle-income groups or homebuyers in the inexpensive category may face a little stumbling block, but the overall expansion of the industry will be unaffected. According to recent trends, the real estate sector has been performing fairly well, and this government decision will help it grow even more. Though the interest rate of 6.50% will slightly burden homebuyers, the economy would be strengthened by the measure. We hope that this increase does not create a significant gap between builders and buyers."

 

Manoj Gaur, President Credai NCR and CMD Gaurs Group
"An increase of 25 bps in repo-rate was expected because the American fed rate was increased a few days ago . These rates have now been increased 6 times because of global economic crises cited by RBI. The previous increases did not have much impact but this increase may start affecting the sector. With no major push for the real estate sector in the union budget and lower inflation forecast RBI could have avoided the increase. However we hope because of high market sentiment the effect could be nullified."

 

Prateek Mittal, Executive Director, Sushma Group
"The RBI has announced a repo rate hike of 25 bps which currently stands at 6.5%. This is the first repo rate increase in 2023, which projects that RBI will maintain an assiduous policy stance to square off the inflationary woes. The moderate hike in repo rate demonstrates that RBI might go for lower repo rate hikes in 2023 as the economy is much better regulated and managed than the situation was in 2022. As far as the real estate sector is concerned, the hike will not dampen housing or commercial space demand as real estate becomes one of the most reliable and sought-after investment portfolios for traditional and new-age investors."

 

LC Mittal, Director Motia Group
"To tamp down inflation rates which RBI Governor said would still be above the 4% target in 2023-24, the RBI has announced a policy rate hike by 25 bps to 6.5%. The increasing geopolitical uncertainties and market volatility necessitate the need for institutional intervention. The sustainable demand for real estate continues to rise by epic proportions, especially luxury realty won’t bear a significant impact on end-users due to high disposable income strengths and portfolio diversification ambitions."

 

Sumit Agarwal, Director, Sales & Marketing, Grandthum
"The conjunction of domestic inflationary pressures and global recessionary challenges has prompted RBI to stick to its policy stance and increase the repo rate by 25 bps to 6.5%. It may afflict retail sales for a brief period due to an imminent hike in retail loans. But the overall macro-functioning and demand will not face a downturn. Infact, the GDP growth of the country is projected at 6.5% for 2023-24, and the real estate sector will expand its share in India’s GDP based on the growing demand."

 

Amit Modi, Director, County Group, President CREDAI *(WUP)
"We understand that despite RBI's sincere efforts, inflation is still a cause of concern, but at the same time millions of first time homebuyers across the country are looking at stability in interest rates, to plan there further course of action while sitting on the edge to decide on their future of home buying process. 
The bank's recent hike of 25 basis points will surely help in controlling the inflationary concerns, but we are also looking forward to stable interest regime for a long term period to help millions of first times buyers across the country. In our view the present hike should not cause much concern, as the quantum is still relatively less."

 

Sanjay Sharma, Director, SKA Group
"While raising the repo rate by 25 bps, the RBI Governor had said that the global economy is not as grim as it was a few months ago. Coupled with the tapering inflation and the projected GDP growth for the current financial year, the sector should easily absorb the impact. However, this is the sixth straight hike taking the total quantum to 6.5%, the highest in four years. Therefore, it is crucial to understand that buyers and developers both look for stability in interest rates. We do hope that the RBI takes a positive note of our demand."

 

Yash Miglani, MD, Migsun Group
"The RBI’s stance to stamp out inflation continues to be the foundation of its repo rate policy, as we witness the first repo rate hike in the new year a week after the Budget presentation. The RBI hikes the repo rate to 6.5% by 25 basis points. The marginal repo rate hike was expected by industry players. The real estate end-users might face a short-term effect on home loan mortgage rates, but it would not cause much of a consequence on the overall scheme of things and demand for housing."

 

Ashwinder R Singh, CEO Residential Bhartiya Urban
"Even though a rise in interest rates will be hard for many people with home loans, it could help people save more, which will help them build wealth and reach their financial and housing goals. Interest rate increases are often a sign of a strong and growing economy, which always leads to more job opportunities, higher wages, better financial security, and more home sales for many households. Here, India is doing well compared to the rest of the world."

 

Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory
"Consecutive rate hikes by the RBI this year were aimed at re-anchoring the inflation expectations and maintaining financial stability. Thus far, the rising cost of house ownership led by higher EMI, higher stamp duty and other factors has not affected real estate sales, which is a firm indicator of genuine demand for housing. But any further hike in the repo rate might temporarily limit the growth momentum of the real estate sector. Although the recently concluded budget was tailor-made keeping the salaried and the middle class in mind, a rate cut at this stage could have triggered the sentiments of the homebuyers sustaining the growth momentum."

Pritam Chivukula - Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
"RBI 's decision to hike the interest rates to tackle the inflation and ensure domestic economic recovery was a no-brainer. But a rate cut would have been a big booster for the real estate sector which was overlooked in the recently concluded budget. The sharp acceleration of rates consecutively for the sixth time in a short period will have a short-term effect on the sentiment of homebuyers as low interest rates have been the biggest factor in the resurgence for real estate demand in the last two years. We hope that the State Government will step-in again to lighten the homebuyer’s load by reducing stamp duty to boost the sentiments."

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 was expected to keep the economy on the track in the current highly volatile scenario. The rising property prices had already added to the woes of the homebuyers and now the decision of RBI to increase the repo rate will temporarily dent the current demand momentum. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and these short-term decisions are likely to have a major impact on a buyer’s decision."

Bhushan Nemlekar, Director, Sumit Woods Limited
"Earlier, due to the pandemic and the geopolitical issues, the input costs were already high and now with these consecutive rate hikes, it will only dampen the spirit of the entire real estate value chain. The cost of borrowing for both developers and buyers will be impacted and this will result in undesired rate hikes across the spectrum. However, we did not see much impact on the buying spree in the last couple of quarters since there are genuine buyers in the market to keep the momentum going."

Dr. Sachin Chopda, Managing Director, Pushpam Group
"RBI's decision to hike the policy repo rate was anticipated, factoring the rise in inflation. The rate hike is likely to shrink liquidity in the economy overall, especially impacting the investor’s sentiments. There will be a short-term pause on the minds of the investors while assessing the volatility of the current market dynamics. However, they are bound to return soon in the market once it is stable."