Mumbai: The interest rate hike announcement by the Reserve Bank of India (RBI) on Wednesday was anticipated by the real estate industry sector as well as those who have or will apply for home loans. After holding three days of deliberations during the Monetary Policy Committee meeting, the RBI announced an increase of repo rate by 35 basis points or 0.35% with immediate effect.
Responding to the decision, chairman and managing director of Rustomjee Group and president of CREDAI-MCHI, Mr Boman Irani said the performance of the housing sector in the last quarter of 2022 has been outstanding. Consumer demand remained robust with sales rising by 4% against the preceding quarter, and 41% annually. “The 35 basis points rate hike by the RBI – the fifth rate hike this year – was well anticipated. With repo rates now at 6.25%, there may be some repercussions on the housing uptake. The Indian housing market is largely end-user driven and they look at the value over the home acquisition cost. The increase in the home loans would have a moderate impact,” Mr Irani said. In the five hikes, the total rate hike has been 150 basis points or 1.5%.
Meanwhile, chairman and managing director of House of Hiranandani, Mr Surendra Hiranandani is of the view that there will be some impact on the homebuying sentiment. However, he anticipates the demand to sustain, considering the necessity to own a home is of profound importance and “2022 favouring the luxury housing segment, with homebuyers grabbing the opportunity by festive offers and sealing the deal”.
Although industry players including Transcon Developers director Ms Shraddha Kedia-Agarwal and Colliers India's managing director (capital markets & investment services) Mr Piyush Gupta agree about the impact, they say the impact to “the overall demand will be for a short term”.
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