Real estate developers on Friday said the RBI should have reduced the key interest rate to boost growth in the sector as macro-economic parameters are currently favourable.
They also urged the apex bank to consider a repo rate cut in its next policy review meet.
The Reserve Bank of India on Friday decided to keep the policy rate unchanged at 6.5 per cent for the fifth time in a row as it maintains a tight vigil on inflation.
Realtors' apex body CREDAI National President Boman Irani said, "Although it's a good move, the Indian real estate industry and the economy at large could have greatly benefitted from a rate cut, given that current macro-economic parameters are favourable." With inflation relatively in check, the economy growing at a faster-than-expected pace, and a reasonably good monsoon, Irani said, "a rate cut would have provided the ideal opportunity to further accelerate housing momentum and overall consumer spending, not just positively impacting the growth of real estate but other sectors too." Another industry body, Naredco National President G Hari Babu said the unchanged repo rate will positively impact both residential and commercial segments.
"However, despite the pause, the current interest rate is at its highest in the last four years. We appeal to the RBI to consider our request in its next review meeting," he said.
Real estate consultant Anarock Chairman Anuj Puri expected the housing sales momentum to continue with a stable home loan rate and a positive economic outlook.
India Sotheby's International Realty CEO Ashwin Chadha said the housing sector, particularly the luxury segment, will continue to thrive amid a well-performing economy and growing purchasing power of Indian consumers.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa at CBRE, said, "The pause on the interest rate is expected to push sentiments further for home buyers, and this continued pause in rates is likely to boost the real estate sector significantly. Expected inflation within the comfortable range will further rekindle the hope of a declining rates regime." Proptech firm Housing.com CEO Dhruv Agarwala said stable interest rates are poised to boost home purchases.
"This stability sets a positive tone for the real estate sector as we step into a new phase of growth in 2024," he added.
According to housing brokerage firm PropTiger data, sales across eight major cities stood at 2,67,309 units in January-September this year and is all set to grow in high double-digit numbers during the full 2023 calendar year against the previous year. Housing sales stood at 3,08,942 units during the 2022 calendar year, 2,05,936 units in 2021 and 1,82,639 units in 2020.
Realty firm Gaurs Chairman and Managing Director Manoj Gaur said the housing sector will get a boost and stability in the interest rate regime will benefit the sector, while Omaxe MD Mohit Goel said the RBI decision will benefit both developers and prospective homebuyers.
Signature Global Chairman Pradeep Aggarwal said the stable borrowing rates would be advantageous for potential homebuyers, fostering increased demand. "This uptick in demand is expected to catalyse growth in the real estate sector, ultimately making a valuable contribution to the country's GDP." Bengaluru-based Sterling Developers CMD Ramani Sastri said the pause in policy rate augurs well for the residential segment.
Real estate consultant CEO Ashish Narain Agarwal said the sector will stand to gain from stability in interest rates. InfraMantra Co-founder Garvit Tiwari said this reinforces stability in the economic backdrop.
Among international property consultants, Anshul Jain, Managing Director, India & Southeast Asia at Cushman & Wakefield, said the RBI's decision bodes well for real estate and its ancillary industries, as it is expected to maintain the ongoing momentum in housing registrations.
He expected more homebuyers and fence-sitters to come to the fore and fulfil their property purchases.
"From a borrowing cost perspective, this move also ensures that homebuyers' EMIs don't increase whereas, for developers, it doesn't increase their financial burden owing to the consistent rate of cost of capital," Jain said.
Knight Frank India CMD Shishir Baijal said the decision will continue to support the existing momentum of housing demand.
"Despite the escalations in the borrowing costs, the overall housing market has continued to remain upbeat; however, the momentum in the affordable segment has lagged. Thus, a pause is supportive of catering to the housing needs of the vulnerable segment," he added.
Savills India CEO Anurag Mathur termed the RBI's policy decision as a "prudent move" aimed at maintaining stability, boosting consumer confidence, and fostering growth across sectors, with a keen eye on managing global economic dynamics and preserving India's financial resilience.
Samantak Das, Chief Economist and Executive Director, Research at JLL India, said, the policy rate pause augurs well for the real estate sector as steady interest rates and improved buyer sentiments will further support the momentum in the residential market over the next year as well.
Healthy macroeconomic fundamentals and some normality in the global economy next year are likely to support a repo rate reduction, he said.
Colliers India Senior Director-Research Vimal Nadar said, "As the housing market continues to outperform 2022 sales, an unchanged repo rate signals steady interest rates for prospective homebuyers and developers. This will aid a stronger 2023 with sales expected to be higher by 20-30 per cent compared to 2022."
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