Ahead of Independence Day celebrations and festive season, the Realty Sector players asserted that the third pause in policy rates is positive news with the residential segment carrying forward its growth momentum through successive quarters. However, few real estate industry players argued that a decrease in these rates would have positively impacted the optimism of potential homebuyers resulting in stimulated home sales. An adjustment like that would have injected more funds into the pockets of prospective homebuyers, motivating them to make their dream home purchase.
JLL India Chief Economist and Executive Director Dr Samantak Das said, ‘’Residential sales during H1 2023 grew by 21% y-o-y, yet another period of high growth. It is interesting to observe that residential sales have consistently reached new peaks in each successive quarter over the past year. While home prices have also risen by 8-15% over the last twelve months, this increase is likely to be kept in balance by the countervailing forces of the unchanged policy rates. With interest rates holding steady, affordability synergies will continue to persist and thus support the homebuyer momentum and residential sales during the coming quarters.’’
CREDAI National President Boman Irani observed that RBI’s stance of maintaining the repo rate at 6.5% is a cautious step towards further controlling inflation in the long run. ‘’With the economy on track & driven by sustained demand across sectors, we at CREDAI reiterate our view that it will be beneficial for consumer sentiment if a repo rate cut is announced in the next MPC review. This will increase consumer spending in the festive season & fuel demand across sectors, boosting our Indian growth story,’’he opined.
NAREDCO National Vice Chairman Dr Niranjan Hiranandani said that the RBI’s pause in rate hikes over the past few quarters will certainly drive up real estate growth. With stronger domestic consumption and NRI demand, the upcoming festive tailwinds are expected to create demand traction in the ownership and built-to-rent housing segments. The market is experiencing a supply catch-up to meet the soaring demand for mid-priced and luxury housing, while the weakening demand for affordable housing represents a spoiler alert. ‘’I believe the Indian commercial segment is attractive to global players due to its cost effectiveness and availability of skilled talent. A sustained economic expansion has led to a rise in the demand for office spaces, organized retail spaces, and warehouses in Indian commercial real estate. There is, however, a possibility that tenants will consolidate and reorganize offices as flex workspaces become more popular,’’he added.
Tribhuwan Adhikari, MD & CEO of LIC Housing Finance MD & CEO Tribhuwan Adhikari said the RBI’s move to maintain a status quo with rates steady at 6.5% has ensured that a stable rate environment is here to stay for some more time. ‘’India’s consumption story remains strong, and the festive season ahead will add further buoyancy to the realty market. Good news for property buyers to take the plunge when sentiments are benign,’’ he noted.
According to Magicbricks CEO Sudhir Pai, the decision to maintain the Repo Rate is a welcome move which continues to provide relief to homebuyers and investors. ‘’Currently, the home-buying sentiment remains strong as observed in our Magicbricks PropIndex report (April-June 2023), as the residential demand increased 7.8% YoY. Hence, we expect that this stability in the Repo Rate will continue to encourage the property-buying sentiment and contribute to the growth of the real estate sector,’’he said.
NAREDCO National President Rajan Bandelkar said the stability in interest rates comes as a relief for developers who have been navigating a complex economic landscape. The unchanged rates provide a certain degree of predictability, which is essential for planning and executing long-term projects. This decision aligns well with our industry’s need for consistency and fosters an environment of cautious optimism.
‘’However, we hope that the central bank remains attuned to the evolving market dynamics and continues to support growth-oriented measures. The real estate developers’ body acknowledges the careful balancing act that the RBI is performing, considering various economic factors. As we move forward, we anticipate collaborative efforts between the industry and regulatory authorities to ensure a robust real estate sector that contributes to the nation’s economic resurgence,’’he noted.
