As widely expected, the Reserve Bank of India in its first monetary policy meeting for FY 2022-23 kept the repo rate unchanged at 4% for the 11th time in a row. The move, industry experts said, will greatly help the economy recover to the pre-Covid-19 levels at a time when the economy is steadily gaining ground.
Anuj Puri, Chairman, ANAROCK Group, said, “Despite inflation edging higher in the aftermath of the Russia-Ukraine war and surging oil prices, the RBI has again decided to keep the repo rate unchanged at 4%. This is the eleventh consecutive time that the RBI maintained status quo amid the current uncertainties and the global economy also seeing a sharp rise in inflation.”
The real estate industry in fact had been gearing up for an increase in the repo rates, and the fact that this has not happened is obviously positive for home loan borrowers. “Developers’ input costs have been inflating steeply and a hike in property prices is not more or less inevitable. Moreover, the acquisition cost in Maharashtra has gone up by 1% on account of the metro cess applicable from this month. To this sombre backdrop, increased home loan lending rates would have been a considerable setback,” Puri added.
Thankfully, homebuyers have a continued opportunity to avail of decadal low home loan interest rates. The overall cost of living has increased significantly since the Ukraine debacle began playing out, and the RBI has taken a proactive and necessary step to maintain relative housing affordability in the country.
“The geopolitical scenario at the global front and other challenges have led the RBI to lower its growth forecast to 7.2% from 7.8% for FY2022-23. However, the Indian economy appears to be well placed to withstand the shock supported by its forex reserves and stable financial sector. From a real estate perspective, the unchanged repo rate will continue to provide elbowroom to homebuyers, since home loan rates are at a record low. The housing sector saw a revival in 2021 and the continued low home loan rates can further propel homebuyers’ sentiments. The RBI hiked its reverse repo rate, which was expected due to inflationary tendencies seen in the economy,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
Industry experts are of the view that the status quo on the repo rate will help maintain the current demand levels and also have a positive growth impact on several ancillary industries.
Welcoming the RBI move, Shishir Baijal, Chairman & Managing Director at Knight Frank India, said, “Despite the disruptions from geo-political challenges as well as inflationary pressures, the RBI recognises the need to maintain economic growth momentum. We welcome the RBI’s continued accommodative stance and status quo on REPO rate. For the real estate sector, low interest rates for a long period of time have served as a key catalyst for the resurgence of demand. The status quo on repo rates will help maintain the current demand levels as interest rate for both homebuyers and developers are likely to be maintained by financial institutions.”
Amit Goyal, CEO, India Sotheby’s International Realty, said, “We appreciate RBI’s stance to defend the growth momentum of the Indian economy and keep key rates unchanged. This is significant for the housing sector, which has just about regained its sales velocity. The industry is already feeling the heat of rising input prices with inflationary pressures. Keeping home loan rates benign is of utmost importance to give a long leg to the sector’s recovery, which in turn will have a positive growth impact on several ancillary industries.”