repo rate hike to adversely affect real estate sector;builders

The increase in the repo rate by 25 basis points has made the real estate sector in Bengaluru jittery as they say it will adversely affect business.

The builders termed it as another blow just when the marketwas recovering from the after effects of demonetisation andimplementation of Goods and Services Taxes (GST).

The vice president of CREDAI, Karnataka, S Suresh Hari said they were expecting the interest rate to come down a littlemore and make housing more affordable.

He was hopeful that theRBI may consider reduction in interest rate for the under-privileged communities.

"0.25% is quite a volume. I don't know why the market policy was decided now. There must be some reason. We are hoping to give a representation, but in the short term it maynot look effective. In the long term it may have definite impact on the market, mainly on our project funding," he said.

Especially after RERA coming into play,their finances had become much more tightened because customer finances were available anymore. So builders have to pump in money through external sources, he said.

The Managing Director of Century Real Estate, Ravindra Pai said the real estate industry would face a setback as it was already experiencing low sales.

With the new REPO rate increase, the keyimpact is that home loans are going to get costlier, he said.

"Homebuyers looking for loan should research and compare interest rates offered by various banks before taking adecision. With the EMI burden passed on to home buyers, thereal estate industry will face a setback as it is alreadyexperiencing low sales," he said.

A similar view was expressed by chief marketing officer of Sowparnika Projects and Infrastructure, Raja Mukherjee.

Hesaid the hike was effected just when the adverse impact ofdemonetization and GST was slowly waning and the realty sectorwas hoping for a better year in terms of sales.

He felt that prospective customers would shy awayfrom investing in property.