RBI’s Repo Rate Hiked by 50 bps may have a short-term impact on real estate demand: Realtors

New Delhi, June 09, 2022: Reserve Bank of India’s Monetary Policy Committee (MPC) decided to hike the Policy Repo Rate by 50 basis points to 4.9 per cent in its June meeting. RBI Governor Das said that MPC members voted unanimously to hike rates and to continue the withdrawal of the accommodative stance.

Real estate experts expect that the repo rate hike may have a short term impact on the real estate demand.

Mr. Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory

“The RBI’s decision to hike the repo rate was aimed at re-anchoring inflation expectation and will eventually result in the strengthening of the economy. An unstable economy is not conducive to the overall health of the real estate industry and therefore, the RBI’s approach towards reviving the economy so far has enabled a robust recovery in the real estate sector. The all-time low home loan interest regime boosted the housing demand and helped the economy to get back to the pre-COVID levels. The rise in property prices due to the increased interest rates, metro cess and higher stamp duty has not affected the sales in the past couple of months which proves that there is a genuine demand. The move to hike the repo rate might temporarily limit the growth momentum of the sector but the demand will continue to sustain.”

Mr. Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI

“After two years of unchanged repo rate, RBI ‘s decision to hike the interest rates to tackle the inflation was a no-brainer. The sharp acceleration of rates consecutively for the second time in a short period will have a short-term effect on the sentiment of homebuyers. The 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 to lighten the homebuyer load by reducing stamp duty and premiums.”

Mr. Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited (SDPL) 

“The prices of construction materials are already high and the decision of increasing the repo rate will somewhat dent the current demand momentum and add to the woes of developers. However, keeping the current market conditions and inflation in mind, the move by RBI was expected to keep the economy on the track in the current highly volatile scenario. For first-time buyers, acquiring a home is considered as the biggest asset and these short-term decisions are unlikely to have a major impact on a buyer’s decision.”

Mr. Jitrendra Shah, CEO, Rockford Group

“RBI’s decision to hike the repo rate was anticipated to keep the inflationary expectations under check. From the real estate perspective, this move will impact the overall growth of the industry by dampening sales momentum while property prices are already on rise. However, we believe that this may also encourage the fence-sitters to make the most of the current schemes offered by developers in the market and take the plunge.”

Ms. Shraddha Kedia-Agarwal, Director, Transcon Developers

“The recent announcement by the Reserve Bank of India on increasing the repo rate by 50 bps, bringing them to 4.90%, will affect the real estate sector to an extent. Banks will soon likely to increase the home loans that will directly impact the consumer’s buying behaviour. The real estate industry was expecting this move owing to tackle the tight inflation of the country. However, we believe that preference for owning a home by homebuyers and strong wage growth will continue to support the housing market.”

Dr. Sachin Chopda, Managing Director, Pushpam Group

“RBI’s decision to hike the policy repo rate by 50 basis points 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 the normalcy is bounced back.”

Mr. Bhushan Nemlekar, Director, Sumit Woods Limited 

“Due to geopolitical conflict, the input costs were already high and now with this rate hike, it will only dampen the spirit of the entire real estate value chain. 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 months since there are genuine buyers in the market to keep the momentum going.”

Mr. Jitesh Lalwani – President, HomeSync Real Estate Advisory

“RBI’s decision to hike in policy rates will lead to increase in housing loan interest rates impacting on the EMIs but we are still bullish about the real estate sector. Homebuyers are more concerned over skyrocketing property prices rather than rising interest rates. We are still optimistic about the current growth run for housing demand since we believe that this move may push homebuyers who are still deliberating to seal the deal. However, we urge the Government to take some necessary measures to control the rise in property prices.”