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Builders want reduction in repo rate in RBI's next monetary policy to boost housing sales

The Reserve Bank of India (RBI) on Friday kept repo rate unchanged.
Last Updated : 07 June 2024, 07:58 IST
Last Updated : 07 June 2024, 07:58 IST

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New Delhi: The RBI should consider reducing the repo rate in the next monetary policy to bring down the interest rate on home loans and boost housing demand, according to real estate developers.

The Reserve Bank of India (RBI) on Friday kept repo rate unchanged.

Commenting on the decision, 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 (Consumer Price Index) 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.

In the next monetary policy, he said the RBI should look toward 'cutting the repo rates for the first time since February 2023, and offer lower lending rates that would boost consumer spending even more.'

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.

Mohit Jain, Managing Director, Krisumi Corporation, said, the housing demand remains stronger, especially in the luxury and high-end segments.

"The RBI status quo on the policy front is expected to keep the momentum going. However, with potential rate cuts on the horizon, the entire real estate market could see an additional boost as and when it materialises," Jain said.

Ashwinder R Singh, CEO, Residential at Bhartiya Urban, said, "The RBI's decision to maintain the repo rate at 6.50 per cent is a strategically sound move that reinforces stability and confidence in the real estate market." Trident Realty Group Chairman SK Narvar said the RBI decision will help in sustaining momentum in real estate sales, while Trehan IRIS ED Abhishek Trehan said the stability in the interest rate regime would help the sector.

Ramani Sastri, Chairman and MD, Sterling Developers, said, "The status quo stance by RBI is welcome to bolster overall market confidence. With the economy looking up and all signs being positive, there is no hesitation among the homebuyers to invest in residential real estate for long-term returns."

Gurmit Singh Arora, National President, Indian Plumbing Association felt that high mortgage rates are affecting affordability.

"...although the maintained status has given an illusion of stability and market predictability in the housing loan market, the long-drawn high-interest rate regime is driving the expenses up in terms of affordability," Arora said.

Amit Modi, Director, County Group, said this move is beneficial for both developers and potential buyers interested in investing in this sector.

Prashant Sharma, President, NAREDCO Maharashtra, said, "We welcome the Reserve Bank of India's decision to maintain its current policy rates amidst the backdrop of volatile food prices, ongoing geopolitical tensions, and the Federal Reserve's extended pause on interest rates."

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Published 07 June 2024, 07:58 IST

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