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

Press Trust of India  |  New Delhi 

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

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

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

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

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.

said this may lead to a hike in home loan rates.

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

Anshuman Magazine, Chairman, 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 as most of the home 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 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."

He said the hike in policy rates could affect the entry level housing market as very low ticket size purchase decision might be pushed further.

However, Nair said the overall sales velocity is expected to remain stable for the rest of the year as most major markets have bottomed out.

Dhruv Agarwala, Group CEO,, and 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."

Vice Manoj Gaur, who is also MD of Gaurs Group, said the RBI should have reduced repo rate to boost housing demand.

Noida-based developer said: "It is huge blow for which is yet to recover from the impacts of demonetisation and the implementation of GST even after a whole year."

He hoped that banks would not increase interest on home as housing segment was still in recovery mode unlike auto sector which was growing steadily.

Joe Verghese, MD, 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."

Deepak Kapoor, Director, Gulshan Homz, said the decision of RBI to increase the rates again twice in a row is a clear indication that the wants to retain its aggressive approach in the upcoming months.

Gurgaon-based developer group MD Ssumit Berry said the increment in repo rate might seem to dampen sentiments in the market but for the real estate fraternity, it might have little or no impact.

Dhiraj Jain, Director, Mahagun Group, said there is still room for financial institutions to cut down on their lending rates for their customers.

Credai said the increase in the lending rates affects the growth in real estate as the net cost on the buyer for the housing unit gets increased, while RG group said the sentiments would be hit in the

Mumbai-based developer said the home loan rate might go up thus impacting customer sentiments.

Dhaval Ajmera, Director, Ajmera Group, said: "This move will make further dampen the already low spirits of the real estate sector, making the home loan more expensive for potential seekers. On one hand where the government is gunning big for 'Housing for All' and affordable housing, such moves are totally out of sync with the vision at centre".

"The increase in policy rate will delay the revival of the country's housing market," R K Arora said.

Gaurav Mittal, MD, CHD Developers, said the rise in repo rate is not likely to hurt the sentiment of the buyers.

Amit Ruparel, MD, Ruparel Realty said, "RBI's decision of increasing the repo rate is a major concern for the housing sector as it has hiked the rates consecutively...With this decision, home are likely to get costlier.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, August 01 2018. 17:55 IST