Real estate hails RBI move of keeping rates unchanged

Real estate hails RBI move of keeping rates unchanged
06/10/2018 , by , in News/Views

The RBI in a surprise move kept the repo rate unchanged at 6.5% in its October monetary policy review on Friday, which surprised almost everyone, including the market and real estate. While some realty developers and experts welcomed the move, others termed it as a worrisome development from a macro-economic perspective.

For instance, Anuj Puri, Chairman, ANAROCK Property Consultants, said this is surprising and contrary to the industry’s expectations, which skewed more towards an increase on the back of increasing inflation and depreciation of the rupee.

“This move could have been seen as favourable for the real estate sector in the short-term; however, banks have already started increasing their lending rates even before the monetary policy was announced. It is, in fact, a worrisome development from a macro-economic long-term perspective. It will result in increased fiscal deficit, which does not bode well for any industry, including real estate, and also in further erosion of the rupee’s value,” he said.

A majority of industry experts, however, hailed the apex bank’s move of keeping the key policy rate unchanged, saying that any hike in the repo rate would have impacted consumption sentiments and also the real estate sector.

Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group

Even though the apex bank has kept the rates unchanged, but we still believe that there is room for financial institutions to cut down on their lending rates for their customers. Prior to this, the last hike was a 25 basis point in the key rates in the month of August 2018 which failed to bring cheer to the market, however now the stagnant rates today might have helped smooth the economy to some extent and the benefits of which are yet to be fully passed on to the customers.

Mr. Kamal Taneja MD, TDI Infracorp

A cut of at-least 25 basis would have been ideal considering that the festival season is around the corner where sales volumes are usually high. RBI has been increasing the rate in the last 2 consecutive bi-monthly review so decreasing the rate would have been a perfect festival gift.   Most of the inventories sold by real estate developers these days are mainly sold on easy home loan facilities and Subvention schemes as interest rates were going down over last one year.   With real estate sector trying to overcome and was on revival mode this a decrease of repo-rate during the festival season could have improved the market sentiment in a big way.

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