The stability in interest rates is poised to motivate potential homebuyers and empower developers to plan and launch new projects with increased confidence.
With the fundamentals of the Indian economy remaining strong despite all global headwinds and inflation well under control, the RBI once again decided to keep the repo rates unchanged at 6.5%, thus extending the festive bonanza that it gave to the homebuyers in its last two policy announcements. Thus, homebuyers retain their advantage of relatively affordable home loan interest rates.
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“If we consider the present trends, the housing market has been unstoppable, and unchanged home loan rates will help maintain the overall positive consumer sentiments. Given that housing prices have risen across the top 7 cities in the last one year, this breather by the RBI is a distinct advantage to homebuyers,” said Anuj Puri Anuj Puri, Chairman, ANAROCK Group.
As per ANAROCK Research, 2023 saw average housing prices rise by anywhere between 10% and 24% in the top 7 cities, with Hyderabad recording the highest 24% jump. The average prices in these markets stood at approx. INR 7,080 per sq. ft., while in 2022 it was approx. INR 6,150 per sq. ft. – a collective increase of 15%.
Going forward, “we can expect the momentum in housing sales to continue, significantly aided by the unchanged repo rates which will keep home loan interest rates attractive and also signal ongoing robustness of India’s positive economic outlook,” added Puri.
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Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “The decision to keep the repo rate unchanged for the sixth consecutive time is anticipated to have minimal influence on the interest rates for home loans, providing relief to both existing and prospective borrowers. The stability in interest rates is poised to motivate potential homebuyers and empower developers to plan and launch new projects with increased confidence. The central bank’s decision to remain focused on the systematic withdrawal of the accommodative stance is likely to rein in inflation further.”
The RBI decision to maintain policy rates at 6.5% was in fact anticipated, given the global uncertainties, which is also highlighted by the governor, including ongoing conflicts and emerging flashpoints worldwide, with disruptions in the Red Sea being the latest example.
However, the encouraging aspect is the remarkable performance of the Indian economy in recent years. “Growth is accelerating, surpassing most forecasts, and inflation is on a downward trend. The projected real GDP growth for the next financial year stands at 7%, with risks evenly balanced. Headline inflation has moderated to 5.5%, which is positive news. If the current scenario persists, we may anticipate a rate cut in the next MPC meeting,” said Amit Goyal, MD, India Sotheby’s International Realty.
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Raghvendra Nath, MD, Ladderup Wealth Management, said, “The outcome of the three-day Monetary Policy Committee meeting aligns with our expectations, as the repo rate remains unchanged at 6.5% and a continued effort towards reducing money supply in the economy is maintained. The cumulative effect of policy repo rate increases is still working its way through the economy through gradual decline in inflation numbers, but geopolitical events and their impact on supply chains and commodity prices are key sources of upside risks to inflation. Although no specific timeline has been indicated for reducing repo rates, it is anticipated that the Reserve Bank of India will initiate this process only after observing a similar move by the United States, aiming to mitigate the risk of capital outflows from India.”
Overall, the current situation bodes well for the real estate market, and robust demand is likely to continue, particularly in the luxury real estate segment.
