NEW DELHI: The Reserve Bank of India’s decision to keep the repo rate unchanged has largely been welcomed by the real estate industry as they believe it provides stability in home loan interest rates at a time when buyers’ and developers’ confidence in the market is strong. However, the industry anticipates a rate cut shortly as India’s consumer inflation is steadily approaching the RBI mark of 4%.
“With the mandate of a stable government now manifest in an unchanged monetary policy, the housing sector’s overall growth momentum will continue,” said Anuj Puri, Chairman – ANAROCK Group
Puri explained that mid-range and premium property segments together account for more than 55% of the current supply. Together, they recorded approx. 76,555 units sold in Q1 2024 – nearly 60% of the total sales. He said that the buyers of this segment are sensitive to volatile interest rates, and upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments.
The affordable housing sector is the most cost-sensitive. While PMAY Urban has sanctioned 118.64 lakh homes against a demand of 112.24 lakh homes, affordable housing (homes priced under Rs 40 lakhs) sales in Q1 2024 recorded 26,545 units – a mere 20% of the total sales. “However, as we have seen, unchanged home loan rates alone are insufficient to induce new vibrancy in the affordable segment. It is hoped that the government will soon introduce further incentives to support it,” added Puri.