Low interest rate regime will boost realty

New Delhi: Realtors on Friday welcomed the RBI's decision to keep policy rates unchanged and its projection of revival in economic growth, saying this will lead to continuation of low interest rate regime on home loans and boost housing demand.

The RBI kept benchmark rate unchanged for third time in a row at 4 per cent. It expects the economy to record positive growth in the second half of 2020-21. The economy contracted by 23.9 per cent in the first quarter and 7.5 per cent in the second quarter due to the Covid-19 pandemic. "Home loans will continue to remain at attractive rates, this should augur well for home buying sentiment," Naredco President Niranjan Hiranandani said. The positive economic growth forecast for the second half of this fiscal would help boost housing demand, he added.

Anshuman Magazine, Chairman & CEO of CBRE India, South East Asia, Middle East & Africa, said:The RBI's decision of keeping the repo rate unchanged was on expected lines owing to the rise in inflation in recent months. The strengthening of recovery in rural demand and the momentum gain across urban sector will support the realty sector, he said.

"Additionally, policy support being provided by the government will continue to boost residential uptake and support construction activity in the upcoming months," Magazine said. Kalpataru MD Parag Munot said it is good news for homebuyers as home loan interest rates are expected to remain at current levels in the ongoing fiscal.

"Continuation of low rates, along with reduced stamp duty and various developer schemes will keep up the robust momentum. Importantly it will serve as the springboard for real estate growth in the next fiscal, as the economy recovers from pandemic's impact," Munot said.

Gaurs group MD Manoj Gaur said the housing demand has improved of late. "With low home loan interest rates, we see increased sales in the coming quarter."

The growth projections of the RBI will instil positive sentiment in the market, which will translate into good numbers for the real estate sector too, said Pradeep Aggarwal, Founder & Chairman – Signature Global. Housing brokerage firm Anarock Chairman Anuj Puri said an unchanged repo rate will ensure that home loan interest rates will not harden anytime soon.

Dhruv Agarwala, group CEO, Housing.com, Makaan.com and Proptiger, said the RBI move to maintain status quo on policy rates was expected in the face of persistently high retail inflation. "Interest rates on home loans are already at sub-7 per cent level, with banks offering further sweeteners such as processing fee waivers among many others. We hope banks will continue to lend vigorously to the real estate sector," he said.

JLL India CEO and Country Head Ramesh Nair said the RBI's decision to hold the rate will help homebuyers to avail the benefit of the prevailing lowest mortgage rates. "Green shoots of recovery armed with other incentives such as stamp duty reduction in some states and the flexibility of developers in offering best prices/payment schemes will help in further improving home sales," he added.

Knight Frank India CMD Shishir Baijal said the low home loan interest rates have played a key role in rekindling the latent demand in housing market by nudging home buyers to make purchase decisions even during the pandemic. "RBI's decision to keep the rates unchanged will keep the momentum of demand intact to provide the much needed stability, as even while there is recovery in the economy, it is still fragile and highly volatile," he said.

Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory, said:"With commercial banks being asked to consolidate profits and not distribute dividends, its time the banks further sweeten the lending rates." Mumbai-based S Raheja Realty Director Ram Raheja said the real estate sector was expecting a rate cut which would have given further impetus to demand and induce liquidity in the market. Achal Raina, COO, Raheja Developers, said there are positives to be taken from the RBI's MPC announcement, which includes a positive outlook towards economic growth.

Amit Modi, Director ABA CORP, said the move was on expected lines and hope banks would continue to fund aggressively to homebuyers and developers. Yash Migalni, MD, Migsun Group, said low interest rate in home loan helped in increasing demand during festive season and hoped sales would continue to improve in coming months.

The industry and the government should strive to revive homebuyer's sentiments, said Ankush kaul, President (Sales & Marketing), Ambience Group. Manju Yagnik, Vice Chairperson of Nahar Group, said the government's ongoing policy support on rates and taxes for the housing sector indicates that the worst is behind us.

"We feel that a rate cut now would have given some respite to the real estate sector which has been facing headwinds due to the pandemic," said Lincoln Bennet Rodrigues, founder and Chairman, Bennet & Bernard Group.