RBI rate cut to boost housing sales this festive season

New Delhi: The RBI decision to cut repo rate by 25 basis points today will lead to cheaper home loans and boost housing sales during the upcoming festival season, according to property developers and consultants.

They expect banks to pass on this rate cut by lowering the interest on home loans.

DLF CEO Rajeev Talwar, who is also Chairman of NAREDCO, said the decision to cut the benchmark repo rate by 25 basis points could not have come at a more appropriate time.

“The Indian economy is at a point of inflection. Easing procedural bottlenecks, speedier project clearances and reviving credit flows to the productive sectors such as real estate are critical for the economy to decisively move to a higher growth trajectory. Another small rate cut in the coming months should not be ruled out,” he added.

CREDAIs President Jaxay Shah said this is a welcome move just before the festival season and will help boost sales.

“Banks should pass on the benefits to customers and the government should enforce and instruct banks to do so,” he added.

The real estate sector is facing a multi-year slowdown, particularly residential segment. The sales have been hit further post demonetisation and NAREDCO President Parveen Jain said the cut was much awaited and will fuel demand.

Tata Housing MD & CEO Brotin Banerjee said: “We anticipate that the rate cut announced today coupled with commensurate benefits for borrowers will impact home loan rate positively and enhance the consumer sentiment.”

The RBI decision to cut repo rate by 25 basis points to 6 per cent – a 7 year low ? is in line with industry expectations amidst low inflationary trends, CBRE Chairman (India and South East Asia) Anshuman Magazine said. “We believe that this cut will result in making housing loans cheaper and help credit offtake in the housing sector.”

He said the decision, along with the new real estate law and GST, would provide further impetus to the segment and help in rejuvenating housing sales.

Knight Frank India CMD Shishir Baijal said that “while it is a welcome move we were looking forward to a much more aggressive rate cut.” However, he said the central bank has adopted a monetary policy that propels economic growth, which in turn would boost the Indian real estate.

Anuj Puri, Chairman, Anarock Property Consultants, said there is surplus liquidity in the system and the policy change might not result in a greater impact on real estate sentiment.

Puri was of the view that property prices affects buying decision more than interest rates and home prices are unlikely to reduce further.

Supertech Chairman R K Arora the RBIs policy is positive for the real estate sector. “With the rate cut prior to start of festival season, the sluggishness in the real estate sector would come to an end,” he hoped.

SARE Homes MD Vineet Relia termed the rate cut as a positive step that will help boost housing demand.

“Today?s rate cut will only add more weight to the sentiments and push the customers to move towards investments where real estate sector will greatly benefit. As GST is settling down and RERA gaining momentum, real estate sector is projected to become the investment hub very soon,” said Abhishek Bansal, Executive Director, Pacific Group.

Deepak Kapoor, President CREDAI-Western UP & Director, Gulshan Homz, said it will boost sales as EMIs on home loans are expected to come down.

“Final festive season of this calendar year is nearing and this rate cut can allow the banks to cut down on their lending rates further,” EROS group director Avneesh Sood said.

Amit Modi, Director, ABA Corp and Vice President CREDAI Western UP, said the move will help revive sectors like real estate which are highly sensitive to interest rate movements, while Antriksh India Chairman Rakesh Yadav said the banks must pass on the benefit to home buyers.

“A reduction in Repo rate today will push the banks to further reduce the lending rates,” SG Estates Director Gaurav Gupta said.

House of Hiranandani Chairman & MD Surendra Hiranandani said there is scope for banks to cut lending rate further given the liquidity situation prevailing in the market post demonetisation.