Impact on real estate sector
There is an atmosphere of enthusiasm in the real estate sector due to the decision of the Reserve Bank of India to keep the repo rate stable at 5.25 percent. Developers and sector experts say that this decision is not only a relief for the housing sector, but it also indicates the stability and strength of the Indian economy.
In the last one year, RBI has continuously reduced the repo rate from 6.50 percent to 5.25 percent. During this period, home loan interest rates softened, which increased the demand from end user buyers. Now by keeping the repo rate unchanged, this positive momentum created in the market is expected to continue in future also.
Change in repo rate in the last one year
Buyers’ confidence will increase
Credai Western UP President Dinesh Gupta said that keeping the repo rate stable is a big sign of confidence for buyers. When there is no possibility of sudden change in interest rates, then customers decide to buy a house with confidence. Due to this, stable and sustainable demand remains in the market. According to Suresh Garg, CMD, Nirala World, “After a balanced budget, keeping the interest rates stable in the market is a positive decision for the real estate sector. This will eliminate the fear of unnecessary fluctuations in the market for both buyers and investors. It is necessary to keep the market stable for the impact of repo rate cuts and reduction in GST in the last one year to be visible in real estate.
The decision will be helpful in increasing employment
Atul Vikram Singh, founder of Vision Business, said that the real estate sector has a direct impact on employment. This decision of RBI will also prove positive for construction, steel, cement and other supporting industries. RG Group Director Himanshu Garg said that the full benefit of the softening in interest rates in the recent past is yet to be reaped. The decision to keep the repo rate stable will give time for its impact to take effect and will help housing demand grow in a balanced manner.
Planning and investment will increase
L.K. Ashwani Nagpal (R), COO, Diligent Builders said that stable repo rate will maintain balance in home loan EMIs, which will enable people to invest with long-term planning. This decision has brought relief especially to the middle class and first time home buyers which will play an important role in bringing stability in the market. According to Shailendra Sharma, Chairman, Renox Group, policy stability is very important for a capital-intensive sector like real estate. This decision of RBI is an attempt to control unnecessary volatility in the market and to strike a balance between growth and inflation by the policy maker. According to Rakesh Singhal Founder Shri KB Group, this decision gives the message that the Indian economy is moving forward on a strong foundation. Stability in policy increases the confidence of both investors and consumers.
Will help in better planning
According to Pankaj Jain, Director, KW Group, “Stability in interest rates provides ease of financial planning to developers. This improves project timelines and ensures timely delivery to customers. Dinesh Jain, MD, Exotica Housing believes that this time the stable repo rate will strengthen not only residential but also commercial real estate as the confidence of retail and institutional investors will increase and new projects will gain momentum.
What is the benefit to real estate if repo rate remains stable?
- No increase in home loan interest rates at present
- End user buyer confidence strengthened
- Relief to middle class and first time home buyers
- Financial planning of developers will become easier
- Speed up new residential and commercial projects
- Support to construction and employment related sectors