New Delhi [India], June 9 : The Reserve Bank of India's (RBI) decision to keep the repo rate unchanged again is a boon for the Indian real estate sector, said real estate consultancy firm Anarock.
"This (policy) stability ensures that home loan interest rates remain low, making housing more affordable for potential buyers. With unchanged borrowing costs, both developers and homebuyers benefit from increased market confidence and predictability," said Anuj Puri, Chairman, of Anarock Group.
The mid-range and premium property segments together account for more than 55 per cent of the current supply. Together, they recorded approximately 76,555 units sold in the first quarter of 2024 - nearly 60 per cent of the total sales.
"The buyers of this segment are sensitive to volatile interest rates, and upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments," Puri said post RBI monetary policy meeting.
In the affordable housing sector, the most cost sensitive, PMAY Urban has sanctioned 118.64 lakh homes against a demand of 112.24 lakh homes, affordable housing (homes priced under Rs 40 lakhs) sales in the first quarter of 2024 recorded 26,545 units - a mere 20 per cent of the total sales.
"However, as we have seen, unchanged home loan rates alone are insufficient to induce new vibrancy in the affordable segment," he said, adding that he hoped that the new government will soon introduce further incentives to support it.
"With the mandate of a stable government now manifest in an unchanged monetary policy, the housing sector's overall growth momentum will continue," he concluded.
As widely expected, monetary policy committee of the Reserve Bank of India (RBI) decided to keep repo rate unchanged at 6.50 per cent, eighth-time in a row, though not unanimously. Two of the members voted to reduce the policy repo rates by 25 basis points (100 basis points is equal to 1 percentage point).
RBI has been consistently focusing on ensuring that inflation progressively aligns to the 4 per cent target, while supporting economic growth.
RBI enhanced its real GDP growth projection for 2024-25 by 20 bps to 7.2 per cent from 7 per cent (Q1: 7.3 per cent, Q2: 7.2 per cent, Q3: 7.3 per cent, and Q4: 7.2 per cent).
RBI in its monetary policy statement also noted that the expectation of normal monsoon augurs well for agriculture and rural demand while sustained momentum in manufacturing and services activity may enable a revival in private consumption.
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