The RBI’s decision to raise the repo rate will, according to the real estate industry, have a moderate impact on housing demand in the near term due to the likely rise in interest rates on home loans.
With borrowing costs set to rise for developers, many builders said home prices could rise as well.
On Wednesday, the RBI raised the Repo rate by 35 basis points amid inflation concerns.
Realtors apex body CREDAI President Harsh Vardhan Patodia said, “Any increase in the repo rate will have a direct impact on end consumers, including homebuyers, as banks will ultimately pass this increase on to customers and this may affect current momentum in the near term.”.
Real estate adviser Anuj Puri, chairman of Anarock, said there may be an impact on residential sales.
“This hike will undoubtedly push up home loan interest rates, which had already risen this year after four consecutive rate hikes. But as long as interest rates remain in the single digits, the impact on the housing market will be moderate at best,” he noted.
Sanjay Dutt, MD & CEO of Tata Realty & Infrastructure Ltd, said the RBI move will raise interest rates on home loans.
However, he said the upcoming quarter of 2022-23 would continue to be the best time to invest across all real estate segments, driven by generally strong talent-driven job markets.
Venkatesh Gopalkrishnan, CEO of Shapoorji Pallonji Real Estate, said: “A 35 basis point increase in the repo rate by the RBI would be reasonable to address inflation and continue the growth of the real estate sector”.
Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India, said that affordable housing and mid-range housing are the most price sensitive and these segments may experience some slowdown in the near term.
“On the real estate side, interest rates on home loans have risen to about 8.5 percent from 6.5 percent prior to May this year, but thankfully we haven’t seen any effect on home demand and sales. continues to improve across all price ranges in the residential segment,” said Dhruv Agarwala, CEO of Housing.com Group.
Signature Global chairman Pradeep Aggarwal said housing demand has remained strong despite consecutive increases over the past year and hoped it will continue to do so.
According to Amit Goyal, CEO of India Sotheby’s International Realty, demand for housing in the seven largest cities has been very strong, despite an increase in mortgage rates.
“We believe this momentum should continue until home loan rates remain in single digits,” he added.
Ramani Sastri, CMD, Sterling Developers, said the continued rate hikes could lead to turbulence in overall housing demand in the near term.
According to Knight Frank India CMD Shishir Baijal, this rise will further impact EMIs and reduce housing affordability.
“However, as we have seen since the start of the rate hike cycle, latent demand has held up, albeit with some moderation in cumulative home sales since the start of the rate hike cycle,” he added.
Emami Realty MD and CEO Nitesh Kumar said this will put pressure on home sales in the coming months, particularly in the affordable and lower mid-range segments.
Ashwinder R Singh, CEO of Residential Bhartiya Urban, said retail mortgage borrowers will be hardest hit.
Rising construction and developer funding rates could affect house prices, he added.
Nayan Raheja of Raheja Developers also said house prices would rise.
Garvit Tiwari, director and co-founder of Inframantra, said the current rate hike could lead to disruption in overall housing demand in the near term.
(This story has not been edited by DailyExpertNews staff and is auto-generated from a syndicated feed.)
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