Reserve Bank Of India (RBI)’s decision to increase the repo rate, the interest rate is set to increase. If realt companies are to be believed, this may affect the sentiments of homebuyers and a mild effect can be seen in the cheap and middle income category. The Reserve Bank has increased the repo rate by 0.5 percent to 5.9 percent. This level of repo rate is the highest in 3 years.
Realty companies said that the increase in the repo rate will make home loans costlier. This will affect the purchasing power of the house. However, the impact may be limited in view of the current festivals coupled with earlier demand.
Anuj Puri, chairman of property consultancy company Anarock, said that after the hike in the repo rate, home loans will soon become costlier. This may affect the sales of affordable and middle class homes to some extent especially during festivals. Despite the hike in interest rate on home loans and increase in house prices, sales of houses have increased by 40 to 50 percent in the July-September quarter.
Chairman of Credai, the apex body of real estate companies (NCR) ) and Manoj Gaur, CMD, Gaur Group, said that the increase in the repo rate by the RBI reflects the confidence in the economy and the outlook for future growth. This was necessitated due to aggressively increasing policy rates in many countries of the world. He said that it will have a marginal impact on the real estate sector. Buyers’ enthusiasm for the home remains high and is expected to continue.
Amit Goel, CEO, India Sotheby’s International Realty, a luxury home brokerage company, said this hike ahead of the festive season will affect the buying sentiment. There may be an adverse impact.
He said that the home loan rates will still remain below 9 per cent per annum and people should use this opportunity and take advantage of the offers and discounts available in the markets during festivals .}} He said that banks have increased the interest rate on home loans by 0.80 percent from April. That is, they have passed on more than 50 per cent of the total increase in the repo rate to the customers.
Nayan Raheja of Raheja Developers said that this hike in repo rate will definitely make loans costlier and affect the long term growth of the real estate market.
Trehan Group Managing Director Summary Trehan said that this is the fourth consecutive hike in the repo rate by the Reserve Bank of India in the last five months. However, despite the previous hike, the demand for home loans remains strong. In fact it is improving in many cities. Therefore, RBI’s decision is unlikely to have any major impact.
Square Yard’s co-founder and CFO Piyush Bothra said the RBI’s move would have any significant impact on consumer sentiments in the real estate sector. Will not. Housing demand remains strong and is expected to pick up during the festive season.