Reactions of Realtors on RBI MPC Meeting

New Delhi, August 10, 2019:

Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com

In line with the government’s commitment to revive growth in India’s economy, the RBI has lowered the repo rate to a record level. This should help pump-prime the overall economy and also provide the real estate sector much needed relief. Lower interest rates along with the higher tax deduction on home loan interest payments that was announced in the Budget in July, would encourage homebuyers to take out home loans to buy property. Additionally, the RBI’s move to enhance the exposure limit of a bank to a single NBFC will infuse more liquidity into the system for NBFCs, which in turn will help real estate developers who are in desperate need for capital at this point of time.

Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI

“The repo rate cut by 35 basis points to 5.4 per cent is a constructive move for the real estate sector. With the fourth consecutive rate cut, we expect the demand for housing to rise marginally. The rate cut is expected to further bring down interest rates on home loans and auto loans as the monetary transmission of previous policy easing have been limited. It will also help boost credit growth in the banking system”.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development

With RBI reducing the repo rate 4 times in a row, shows a softer stand towards lending. A few banks have passed the benefits to the customers and I am sure they will surely reduce the lending rates, though marginally, which can boost the sentiments in the market. Also with the push which the government showed towards affordable segment in the Union Budget 2019. I am sure end users would now be more motivated, to purchase their homes, post the repo rate cut.

Enhancing exposure limit of a bank to a single NBFCs to 20% of the Tier 1 capital of the bank from 15% earlier means banks can increase their lending to NBFCs and the limit of Priority sector lending through NBFCs has been to Rs 20 lakh from Rs 10 lakh earlier will further boost the affordable housing sector in country.

Mohit Goel, CEO, Omaxe Ltd

With inflation well within the RBI range and economy showing signs of slowdown, the repo rate cut of 35 bps to 5.4% is on expected lines. Despite repeated cuts in policy rates by the RBI, fourth since January 2019, commercial banks have not passed on the cut to borrowers. As a result, lending rates continue to remain high. The slowdown in economy coupled with high lending rate has accentuated the slump in housing demand.

Mr. Uddhav Poddar, MD, Bhumika Group

Reduction in repo rate by another 35 basis points will bring down construction finance costs and ease out home loan rates, giving yet another boost to the real estate sector. Apart from this, RBI has also enhanced exposure limit of banks to a single NBFCs, which in turn would boost credit to real estate sector and tackle the liquidity crunch. The step was necessary and the Govt and RBI have taken timely steps to ease the liquidity situation. We expect some more measures in the coming days.

Amit Modi, Director, ABA Corp & President (Elect) CREDAI Western UP

This is the fourth straight rate cut from the RBI and it results in an overall decline of 110 basis points or 1.1 percentage point in the key lending rate, not just that the benchmark rate is now at the lowest since April 2010, but unfortunately there is still no major effect on the ground, and this is mainly due to the fact that despite the repeated reductions, the majority of banks are not passing the benefits of the rate cuts to end consumer. Rather than making sure that consumers are offered reduced interest rates on home loans which will result in lower EMIs, there is still an ongoing tendency of cushioning the bottom lines by the banks, which ultimately turns out to be counterproductive to the move itself. The Monetary Policy Committee has once again maintained an accommodative stance; we hope that the banks are also more accommodative in their stance towards the home buyers aspirations.

Ashok Gupta, CMD, Ajnara India Ltd.

The reduction in policy rates, while on the expected lines, is a welcome step. We hope commercial banks also do their bit. Also, important is the enhanced exposure limit of banks for a single NBFC. The move will ensure greater funds for NBFCs and it would help realty sector a great deal.

Deepak Kapoor, Director, Gulshan Homz

The liquidity situation might see a change as RBI has enhanced exposure limit of a bank to a single NBFCs to 20% of the Tier 1 capital of the bank from 15% earlier, which will mean that banks can increase their lending to NBFCs. We hope that banks will give the benefits to the buyers and there will be reduction in EMIs. Sales, launches and delivery will likely improve in near future. With festive season around the corner, the impact of the move may be visible in the upcoming months especially in the affordable and mid-segment category. 

Amit Raheja, CMD, Wealth Clinic

The benchmark lending rate cut by 35 bps to 5.4 percent is a positive move for real estate sector after the budget and before the start of the festive season. The move, which is fourth rate cut this year, will surely give boost to the price sensitive affordable housing segment as they will get to pay lower EMIs along with other incentives that they get in affordable segment. Also, tier II and Tier III cities will benefit as the houses there will witness more sales after the expected cut in EMIs. It is also expected that banks will increase their lending to NBFCs and hence the liquidity situation in real estate sector will improve. If this happens then the sector will be back on fast track. We might see more project launches and deliveries of projects that are stuck. However, all of it depends on the transfer of benefits to the borrowers. 

Vikas Bhasin, CMD, Saya Group

Four consecutive repo rate cuts this year is a positive outcome for the economy. Real estate sector welcomes the move by the RBI and hope that this will solve the liquidity problem and increasing EMI burden of people. The sector flourishes in a positive economic environment and the constant effort by the RBI is a clear indication that the authorities are serious towards tackling the issues that are affecting the real estate sector. For now affordable housing will get a big boost especially at a time when festival season is around. Mid-segment housing too may also witness an increase in sales but the scale of effect on sales might be a little less than the affordable segment. Peripheral towns, Tier II and Tier III might see a good response to real estate project where prices are under check and with latest rate cuts there is more likelihood of increasing affordability and hence conversion into good sales.

Mr. Prateek Mittal, Executive Director, Sushma Group

The reduction of 35 basis points in third bimonthly RBI monetary policy by the central bank will provide the required impetus to the economy of the country. This move along with infusing liquidity in the banking system will also result in reduced burden on banks’ resources which will further bring down interest rates on home loans providing the much needed boost to the real estate industry.

It will also provide a liquidity push to the developers as well, boosting the growth of the sector.

Mr. L.C Mittal, Director, Motia Group

The fourth consecutive repo rate cut in the bimonthly RBI monetary policy is a commendable and much needed step taken by the central bank to curb the liquidity situation. With a reduction of 35 bps, the repo rate now stands at 5.4 per cent which will further push the housing segment after all the initiatives taken by the government to boost the segment.

Dhiraj Bora, Head Corporate Communication, Paramount Group

The fourth consecutive repo rate cut from the RBI is in lines with the expectations. We hope that the reduction is passed on by the banks to the home buyers. Lower interest rates, along with the recent reduction in GST rates for under construction properties, should provide the fillip to end-user demand. On top of it the upcoming festival season might turn out to be a good one for real estate.