RBI's decision to hold repo rate steady boosts real estate sector's confidence

RBI monetary policy: Real estate experts have hailed the Reserve Bank of India’s (RBI) decision to once again keep the repo rate unchanged at 6.5 per cent, marking the ninth consecutive time the Monetary Policy Committee (MPC) has opted for status quo.

Announced on Thursday, August 8, this decision reflects the RBI's balanced approach to managing inflation while supporting economic growth amid global uncertainties. The move has been met with widespread approval across the property sector.

Rate hold aims for stability

Shishir Baijal, Chairperson and Managing Director, Knight Frank India, expressed his support for the RBI's cautious approach.

"The RBI continues to maintain the policy repo rate at 6.5 per cent, especially considering the inflationary pressures driven by persistently high food prices. By holding the rate steady, the RBI seeks to mitigate inflation without stifling economic momentum," he said.

This decision, according to Baijal, highlights the RBI’s focus on ensuring long-term price stability while boosting sustainable economic growth.

Baijal further highlighted the positive impact on the real estate sector, saying, "Stable interest rates mean that borrowing costs for homebuyers and developers remain constant, encouraging further investments in property. This stability will foster confidence amongst potential homebuyers and support ongoing residential sales momentum."

Steady borrowing costs boost demand

G Hari Babu, National President of NAREDCO, highlighted the benefits of steady borrowing costs. "The RBI's decision creates a stable environment for the real estate sector. With steady borrowing costs, home loans become more affordable, likely to boost demand in the housing market, especially during the upcoming festive season."

Anantharam Varayur, Co-founder of Manasum Homes Senior Living, stressed the positive implications for senior living facilities. "Stable interest rates mean developers can secure financing at predictable costs, essential for the development of high-quality, sustainable housing solutions for seniors. This regulatory stability supports long-term planning and investment."

Tier 2, 3 markets to surge

Piyush Lohia, Director of Lohia Worldspace, pointed out the potential for increased demand in tier 2 and tier 3 markets. "Stable interest rates mean borrowing costs stay manageable, helping firms finance their projects without unexpected cost increases. This stability is especially timely with the festive season approaching, likely to increase demand for homes."

"This is the longest the RBI has maintained a status quo in 25 years. From a borrowing cost perspective, this move ensures that homebuyers’ EMIs don’t increase, and for developers, it doesn’t increase their financial burden," said Amit Jain, Chairperson and Managing Director of Arkade Group.

Rate stability wins approval

Nitin Bavisi, CFO of Ajmera Realty and Infra Ltd, praised the strategic stance by the RBI. "The unchanged MPC rate for the ninth consecutive time is a strategic stance to maintain sustained economic growth and keep a rigorous check on the inflation rate. Given the economic volatility at the global level, this is an enduring demonstration by the RBI to be cautious of economic turbulences while ensuring the domestic economy scales new heights."

Overall, the RBI’s decision to maintain the repo rate at 6.5 per cent has been met with widespread approval within the real estate sector.

By providing a stable borrowing environment, the RBI has boosted confidence amongst homebuyers and developers, setting the stage for continued growth and investment in the industry.

As the festive season approaches, the sector is poised to capitalise on this period of stability, driving economic expansion and innovation.