Dushyant Singh, Director, Orion One 32, said “By refraining from rate adjustments, the central bank aims to provide stability while incentivizing banks to offer attractive home loan packages, thereby revitalizing the housing market.”
The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the first bi-monthly monetary policy of the financial year 2024-25 today. The central bank kept the repo rate unchanged at 6.5%.
On monetary policy decisions, RBI Governor Shaktikanta Das said, “The Standing Deposit Facility rate remains at 6.25% and the Marginal Standing Facility rate and Bank Rate remain at 6.75%.”
The majority Of polls had already predicted that RBI will not change the repo rate and maintain the status quo. RBI has also made predictions about inflation, GDP growth of India. Let see what experts analyze RBI Monetary policy and how it will impact on different sectors.
What Experts Say On RBI Monetary Policy
Vikas Garg, Joint Managing Director, Ganga Realty said that the RBI’s decision to maintain the rates ensures stable EMIs for borrowers. He also emphasized how today’s decision will impact the real estate sector and factors related to it. He added “ By keeping the repo rates steady, the RBI emphasizes its commitment to controlling inflation within the targeted range. Although a decrease in rates would have been preferable for the real estate sector. Nonetheless, We anticipate sustained sales momentum across different property segments, spanning affordable, mid-range, and luxury housing, in various regions in the future. However, we expect that a downward revision later this year would provide additional impetus to the sector.”
Amit Gupta, Director of Orris Infrastructure, highlighted how maintaining repo rate unchanged will impact on real estate sector. He added, “In the realm of real estate, the pause in further rate hikes offers a momentary reprieve, even as home loan rates remain elevated following last year’s cumulative 250 basis points increase. As we advance into 2024, the transmission of these cumulative hikes to bank lending rates will become more pronounced, affecting the affordability and serviceability of mortgages. Nevertheless, India’s all-encompassing growth prospects appear promising, supported by robust domestic demand drivers. Our favorable demographics, rapid urbanization, and increasing household incomes continue to fuel sustained structural housing demand, transcending transient property cycles. Therefore, while there may be some moderation in property inquiries due to higher borrowing costs, significant declines in volumes are unlikely.”
Experts On How RBI Monetary Policy Impacting Real Estate Sector
Saransh Trehan, Managing Director of Trehan Group, found RBI’s decision of maintaining the status quo logical and found it encouraging for the home buyers to invest in the real estate sector. He said, “Given the burgeoning consumer demand in the real estate sector, particularly in luxury housing, maintaining the status quo on the repo rate appears logical and aligns with favorable macroeconomic indicators. This decision is likely to encourage prospective homebuyers to flock towards property investment opportunities, taking advantage of reduced home loan EMIs.”
He mentioned the reasons behind current demand in the real estate sector and said that declining inflation and steady GDP growth are pivotal factors bolstering the overall demand in the real estate market. He added, “As India positions itself as the world’s fifth-largest economy, with aspirations to ascend to the third position in the future, the real estate sector is poised to significantly contribute to this trajectory. It is imperative to sustain positive demand momentum, and thus, the current repo rate policy effectively achieves this objective.”
Dushyant Singh, Director, Orion One 32, said that the RBI mandated to maintain the status quo on repo rates reflects a prudent approach to fostering economic recovery. “By refraining from rate adjustments, the central bank aims to provide stability while incentivizing banks to offer attractive home loan packages, thereby revitalizing the housing market. This deliberate action is expected to infuse positivity into the real estate sector, creating a favorable environment for both developers and prospective homeowners. While the decision supports the objective of boosting housing demand, it also acknowledges the necessity of proceeding cautiously amidst inflationary pressures. The deliberate stance on borrowing rates is set to favor potential homebuyers by ensuring affordability and sustaining momentum in the real estate sector,” he added.
Shiven Vikram Bhatia, Executive Director, Splendor Group, thought RBI’s decision to maintain the status quo on repo rates will help the reinforcing economic recovery and encourage banks to offer favorable home loan terms to stimulate housing demand. He added, “This decision is expected to inspire confidence among developers and homebuyers alike, allowing banks to offer more appealing rates to boost housing demand. However, considering the inflationary pressures, banks may exercise caution in reducing rates excessively. The stability in borrowing rates will be beneficial for potential homebuyers, thus promoting increased demand within the real estate sector.”