Repo rate cut by RBI: Unlikely that mid-income buyer sentiment will improve – developers

Yesterday, the RBI in its benchmark repo rate cut by 35 basis points to 5.40% raised the expectations of the real estate developers. The developers believe that the historic repo rate cut by the RBI for the fourth time in a row will be going to boost the demand in the affordable housing segment. But they are sceptic about the improvement in the buyer sentiment in the mid-income group.

Chairman of Anarock Property Consultants, Anuj Puri stated that there are over 2 lakh units in the top seven metro cities across India. The cut in repo rate by 35 bps points may improve the condition to some extent, but the step is not significant in improving the sentiment of the middle-income group people. The repo rates cuts by 35 bps will not be going to affect the housing in tier-I cities as the interest of the banks on housing loans are affordable, but the property rates in the metro cities are not stated Puri.

“Growth will also depend on whether there is a proportional transmission of rate cuts to the end consumer,” said Ramesh Nair, country head at property consultant JLL India. The developers believe that this step by RBI will lower down the interest rates, which will bring down the EMI’s of the homebuyers. Ashish R Puravankara, managing director at Puravankara Ltd. stated that “We hope banks and housing finance institutions will and pass on the benefits. For the real estate sector, a reduction in the cost of funds means that we can pass that on to our customers directly, which will be encouraging for the sector at large.”

According to recent data, the real estate has registered a considerable growth sale. Hyderabad recorded the highest growth in sales, followed by Delhi and NCR. Whereas Chennai saw a significant decline in sales compared to 2018. Recently, the government lowered the GST rates in affordable homes to 1% from 8% without ITC (Input Tax Credit). The government also reduced the GST rates on under-construction projects from 5% to 12% in the affordable housing segment. Developers believe that the sales and overall growth of real estate is likely to grow because of such progressive policies of the government.

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