The real estate sector did not receive anything significant in the recent RBI MPC, but realtors are taking comfort in the RBI's decision to maintain the status quo in the repo rate. According to realtors, "The apex bank is clearly confident about economic growth in the recent MPC. As the economy recovers from the pandemic, the central bank has pushed for a steady policy environment. In FY22 and FY23, a progressive unwinding of liquidity, stable energy costs, and the government's handling of the pandemic will be critical to growth."
Thanking the apex bank for continuing with the accommodative stance, Pradeep Aggarwal, Founder & Chairman, Signature Global Group, Chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development, said, “The low home loan interest rate has been a crucial demand by real estate, and the RBI has helped the sector by maintaining the status quo. We would suggest that the buyers take advantage of the current situation because later prices might go upwards under the pressure of increased costs.”
The RBI maintained a low repo rate that would be helpful for the real estate sector. “We have to understand that real estate does not work alone but depends on the growth of all other sectors/industries. The accommodative stance that RBI has taken will boost the economic environment and lead to a conducive situation for the real estate sector too. Looking at the increased demand for real estate, we urge the state governments to reduce stamp duty to be a gift to the homebuyers,” said Ar Nayan Raheja of Raheja Developers.
The value of the real estate as an asset will continue for long, and strengthen with time as the industry begins to recuperate; low home loan interest rates have worked really well for the sector. Additionally, more push is needed with support from govt. to bring back the influx of fence-sitters in the market. Navdeep Sardana, Chairman & Managing Director, Elite Landbase, said, “Since May 2020, the RBI has kept the repo rate unchanged, which is understandable. A tightened fiscal policy is counterintuitive in a time when the emphasis is on growth and spending. However, it is also a time, when a shift is needed from a number-centric fiscal approach to a more holistic and sector-specific policy roadmap. In real estate, there is a pressing need for tailormade subsidies and discounts to help the sector recover fast. We have seen how stamp duty reduction has boosted housing sales in the past and similar measures can be icing on the cake. Likewise, credit subsidies to developers and reviewing of GST on raw materials can also be highly helpful and optimize the overall housing supply chain".
Realtors feel that though real estate needs several measures, it will be good to implement the announcements made in the last few months to achieve progress. LN Jha, Director, SKA Group, said, “As the inflation is pegged at 5% (within the safe zone of 2-6%), RBI’s decision to keep the repo rate unchanged at 4% was very much on the expected lines. Simultaneously, the sustenance of accommodative stance also bodes well for the emergence of a strong economy, out of the sustained revival path. With new variant being found, these are crucial times which require high degree of monetary and fiscal support and RBI is dealing rightly with it. This decision will have a long-lasting impact in ensuring consistent growth to the entire real estate sector and its ancillaries.”
Uddhav Poddar, MD, Bhumika Group, said, “While the MPC expectedly maintained status quo on the policy rates, we would have hoped for a reduction in rates to uplift the sentiment, especially when customers have started regaining their faith back and have began treading towards making high-end purchases. Lower EMIs play a critical role in order to rekindle demand, and make real estate assets more appealing. RBI has also enhanced the transaction limit to Rs 5 lakh from Rs 2 lakh for UPI payments for RBI's Retail Direct scheme, which will be giving a significant boost to the particular segment.”
“Though we had hoped for real estate specific announcements, we recognise that the RBI needs focus on all sectors to achieve economic development. Maintaining the repo rate in real estate will help a lot in terms of retaining buyer sentiment. While a stable repo rate is appropriate, the necessity for industry-specific measures cannot be neglected,” said, Dhiraj Bora, Head - Marketing & Communication, Paramount Group.
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