As broadly anticipated, the RBI elevated the repo charge by 50 bps to 4.9% on Wednesday, which was imminent in view of the present inflationary trajectory and geopolitical considerations.
A majority of realty consultants and builders welcomed the RBI transfer to tame inflation. However, they feared that the speed hike will finally make residence loans costlier, impression purchaser sentiment and hit residential gross sales.
Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com, stated, “The RBI move to increase the repo rate by 50 basis points to 4.90% was widely expected. We can say that we are in the midst of a rate up-cycle as inflation remains outside the comfort level of the apex bank. However, the twin rate hikes by the apex bank would ultimately result in home loan interest rates going up, thereby impacting buyer sentiment that has remained consistently strong during the record low interest rate regime over the past year. The increased cost of borrowing would also make construction of housing projects costlier for developers, ultimately putting price pressure on the end-user.”
However, the RBI announcement to extend the restrict for particular person housing loans by state and district cooperative banks by 100% is a optimistic transfer that can cushion among the impression of the speed hike. Credit stream to the housing sector can be probably to enhance with rural cooperative banks beginning to finance residential initiatives.
Dr Niranjan Hiranandani, Vice Chairperson-NAREDCO and MD-Hiranandani Group, noticed, “A two-thong approach by the RBI governor and the Government of India by means of monetary and fiscal intervention is an absolutely necessitated step to administer economic growth as well as arrest inflationary pressure. A corroborated approach is hailed by India Inc to sustain economic resiliency and boost sentiments. It is, however, evident that home loan interest rate hike will impair the home buying rally as pay out in terms of EMI is scheduled to rise. But according to me, this crater in demand sentiment is a makeshift move, as home loans are based on floating rate for a long tenure. The EMI constraint will be eased as rates are expected to normalize once the global situation is stabilized.”
Ridhima Kansal, Director, Rosemoore, stated, “In the backdrop of rising inflation, the RBI has implemented a rate hike by 50 basis points. This is the second consecutive rate hike after the apex bank increased the repo rate by 40 bps last month. This is a move that has come as a no-brainer since the RBI has attributed the current scenario to tensions between Russia & Ukraine along with currency depreciation & high supply shock.”
The escalation in charges has positively prompted retail debtors to undertake a bearish outlook in relation to borrowing as the price of taking out loans is now noticeably larger. “However, looking at the consistent pace of improved urban demand, there is still optimism as far as uptake in commodities such as home fragrances is concerned, which are predominantly emerging as a popular product among buyers,” she stated.
Some builders additionally urged the federal government to take concentrated efforts to scale back the spike in costs of uncooked supplies akin to cement, bricks, metal, and so forth.
Suren Goyal, Partner, RPS Group, stated, “We welcome the step of the apex body to increase the overall repo rates by another 50 basis points. This will help in clamping down inflation and smoothen economic growth. A rise in inflation can soften the stance on an otherwise robust real estate industry. Already raw material prices are increasing and an unbridled rate of inflation will further drive the input costs northwards, therefore resulting in cost overruns for the developer fraternity. In such a case, they will have no option but to pass on the price rise to homebuyers. Meanwhile, the government should also take concentrated efforts to reduce the spike in prices of raw materials such as cement, bricks, steel, etc. This will also give some relief to the sector.”
Source: www.financialexpress.com”