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Rise in Repo rate likely to hurt homebuyers' sentiment

Rise in Repo rate likely to hurt homebuyers' sentiment

New Delhi, Increase in repo rate by 50 basis points by RBI leading to short term interest rate spike is likely to hurt the homebuyers' sentiments. While real estate developers are conscious about the inflationary pressure building up with the spiralling economic discord, they will chalk out deal sweeteners on the back of festive tailwinds.

"Industry reckons the RBI's focus on sustainable economic growth with Real GDP forecast at 7.2 per cent for FY23, while continuing its monetary intervention to tame global inflation headwinds by increasing repo rate by 50bps. As the home loan borrowing is at the flexible rate, short term interest rate spike will certainly hurt the homebuyers' sentiments, but it averages out the cost positively in the long term," said Dr Niranjan Hiranandani, National Vice Chairman, Naredco.

Amit Modi, President of CREDAI Western Uttar Pradesh, said that RBI's increase in repo rates by 50 basis points has once again increased the interest rates on loans. "This is certainly going to impact the efficiency of buyers, especially the middle-class section of society. After this hike, millions of homebuyers might be sidelined and alienated from the property markets. This will decrease the pace of sales of projects in the real estate market," he added.

Manoj Gaur, President CREDAI NCR said that the present repo rate hike of 50 bps by RBI is on expected lines. "With this increase the repo rate completes a full circle and is back at the pre-pandemic levels. I don't think it will have much impact on the consumer sentiments which remains buoyant at present. Housing as well as retail sectors will continue to thrive as the actual increase in home loan interest rates by the banks will be marginal at the best," he added.

Nayan Raheja of Raheja Developers said that strong institutional action is needed to restore the economic health of the country and RBI has taken a sound approach by increasing the repo rate by another 50 basis points to bring down the inflation rates. "Though it might pinch the property markets in the start, it won't have any lasting impact. The robust customers' demands and growing income stability have kept the real estate markets in a fairly advantageous position," he added.

Raheja said that prices of residential markets are also not high, and the pressure of input costs has also not been transferred to buyers this time. "In a nutshell, the real estate markets have overgrown from the effects of the pandemic. The RBI's decision to raise the repo rate will help the sector to ward off the deep ends of inflationary challenges and come out stronger," he added.

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