RBI monetary policy: Back-to-back hikes will hit sales, say realtors

Consecutive rate increases by the Reserve Bank of India (RBI) will affect home sales, property developers and consultants have said. 

“The second consecutive repo hike will push overall interest rates in the economy, which may impact the real estate and consumer goods sector that have just started seeing green shoots. The hike may act as a temporary dampener especially in the affordability housing sector as the borrowing cost for the sector will go up as banks may increase interest rates on loans in the immediate future,” said Rajeev Talwar, chief executive, DLF, the country’s largest property developer.

Talwar added that while the higher borrowing cost would be temporary, the housing sector outlook remains positive on renewed interest for completed and ready-to-move in properties by end users. 

J C Sharma, vice-chairman and managing director at Bengaluru-based Sobha said, “This will increase the cost of funds for companies, lenders and borrowers, including home buyers.” 

Niranjan Hiranandani, chairman and managing director at Hiranandani Communities, said that the hike would negatively impact buyers’ sentiment with the logical result on quantum of sales. With lower sales growth, falling prices and high unsold inventory, residential real estate is in pain, consultants said. Though unsold inventory levels have fallen 17 per cent in the first half of this year, the quarters taken to sell the inventory.