The Reserve Bank of India’s (RBI) decision to maintain the policy rate is in line with the real estate sector’s expectations as the sector is just recovering and is yet to bounce back to pre-Covid-19 levels, said Ramesh Nair, CEO & Country Head, JLL.
“Residential real estate witnessed initial signs of recovery with sales increasing by 34 per cent in Q3 2020 over Q2 2020. Today’s RBI’s decision to hold the rate will help homebuyers to avail themselves of 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.
He further said: “Higher-than-expected recovery in Q2 FY21 GDP reflects the resilience and robustness of the economy. RBI’s decision to hold the policy rate and accommodative stance to revive growth on a sustainable basis augurs well for the economy. This is in spite of the fact that inflation for April to October 2020 is hovering above the higher limits of RBI’s inflation target.”
Transmission of rates slow
Anuj Puri, Chairman – Anarock Property Consultants, said: “There is no denying that consumer inflation is at the upper end of the apex bank’s band, and the policy repo rate has already been substantially reduced by 140 basis points in 2020.
It goes without saying that the real estate industry's perennial hope is fixed on lower interest rates. This would be enabled by reducing the repo rate — a least in theory, given that transmission of reduced repo rates to bank interest rates has been slow at best. With real estate demand gradually returning, especially in the wake of developers’ discounts and freebies and reduced stamp duty charges (in Maharashtra), reduced repo rates would have given an added boost to the ongoing festive season.”
Aides residential uptake
Anshuman Magazine, Chairman & CEO - 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. In the wake of Covid-19, second quarter (Q2) of FY21 witnessed a strong improvement in consumption and therefore RBI maintaining the status quo for the third time in a row is a positive step in keeping inflation under control.”
“The way our central bank has maintained an accommodative stance will ensure adequate liquidity in the system and will further reinforce stability in our economy. The strengthening of recovery in rural demand and the momentum gain across the urban sector will also support the real estate sector. Additionally, policy support being provided by the government will continue to boost residential uptake and support construction activity in the upcoming months.