Housing sales to get affected with RBI's decision to hike policy rates: Realtors

Housing sales are likely to be affected post RBI's decision to hike key policy rates as this could lead to increase in interest rate on home loans, according to property developers and consultants.

The Reserve Bank for the second time in two months has raised its benchmark interest rate by 25 basis points on inflationary concerns.

"From a real estate perspective, this hike will negatively impact buyer sentiment with the logical result on quantum of sales," Realtors' body NAREDCO President Niranjan Hiranandani said.

Real estate sector is facing a multi-year slowdown due to low demand and significant delays in execution of housing projects by developers.

Property consultant Knight Frank India CMD Shishir Baijal said the increase in repo rate was on expected lines given the current inflationary trend.

"However, looking at the challenging residential market scenario, we were hoping that the RBI would have paused the rate hike thereby providing a fillip to the buyer sentiment," he added.

ANAROCK chairman Anuj Puri said this may lead to a hike in home loan rates.

However, he said the overall real estate sector now rests on a strong footing and buying decisions might not be altered by these marginal changes.

Anshuman Magazine, Chairman, India and South East Asia, CBRE, said: "Most banks are expected to realign their deposit and lending rates following this policy announcement. However, the move is unlikely to impact the real estate sector as most of the home loans are floating in nature and come with 15-20 year tenure. Hence, the rise and fall in interest rates get balanced out during the loan life cycle."
JLL India's CEO and Country Head Ramesh Nair said: "This may be a mental setback for the end users as despite a healthy GDP, lending rates for homes and other desirable goods will move northwards."
Dhruv Agarwala, Group CEO, Proptiger.com, Housing.com and Makaan.com said: With the rates now going up, borrowers can expect a further rise in loan costs after the latest RBI policy and the markets are expected to dip slightly but with the stability, it has achieved in the past, it is expected to recover from the slump eventually."
Noida-based developer ABA Corp Director Amit Modi said: "It is huge blow for real estate sector which is yet to recover from the impacts of demonetisation and the implementation of GST even after a whole year."
Joe Verghese, MD, Colliers International India said: "It looks like that the opportune time for discount hunting in case of residential investments is slipping away. We should be at the last stages of the phase to buy at good bargains."