The RBI's decision to maintain the repo rate at its current level will likely continue to keep housing demand robust during the upcoming holiday season. The Reserve Bank of India's (RBI) monetary policy committee decided to maintain the benchmark interest rate at 6.5% at its October review meeting. With this, the central bank has preserved the current situation for a fourth time in a row. “The unchanged repo rate is a festive bonanza for homebuyers and gives them yet another opportunity to make cost-optimized home purchases. If we consider the present trends, the overall consumer market looks bullish across sectors, particularly the automobile and housing markets, which in many ways reflect the health of the economy. We are entering the festive quarter with a very strong momentum in housing sales, and unchanged interest rates will act as a major catalyst for growth in the residential market", said Anuj Puri, Chairman, ANAROCK Group. As per ANAROCK Research, housing sales across the top 7 cities created a new peak in Q3 2023 and stood at 1,20,280 units as against over 88,230 units sold in Q3 2022, thus recording 36% yearly growth. The momentum in residential sales has sustained even as an inflationary environment forced the RBI to increase the repo rate by 250 bps between May 2022 to February 2023.
This has affected homebuyers, especially in the affordable segment, as the interest on home loans has now surged to about 9% from less than 7% in April 2022. The industry was concerned that another interest rate hike, coupled with high real estate prices, may discourage buyers from making a big ticket purchase. “Continuation of pause in the Repo rate was much needed albeit looming inflationary pressure arising from rising crude prices and rupee depreciation. By pausing the policy rate, the central bank continues to maintain its focus on economic growth, which is facing headwinds primarily from external factors, such as a slowdown in global growth, high energy prices and geopolitical tensions; and remains cautious of inflationary pressure as well" said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said that the upcoming festive season is expected to further drive economic activity across segments from real estate and FMCG to automobiles, etc. “We also anticipate a substantial number of homebuyers to finalise their decisions during the festive season, taking advantage of the repo-rate pause and any developer incentives". Ramani Sastri, Chairman and MD, Sterling Developers, said that they are witnessing a surge in inquiries and expecting around 20% growth compared to last year’s festive season. He added, “This naturally offers a context for consumers to go in for their dream homes as the overall climate is geared towards sustained demand and the fact that home buyer confidence is at an all-time high".
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