In line with market expectations, the Reserve Bank of India (RBI) on September 30 announced a 50 basis points hike in the repo rate stepping up its fight against persistently high inflation. Repo is the rate at which the central bank lends short-term funds to banks. One bps is one-hundredth of a percentage point. With the latest rate hike, the repo rate now stands at 5.9%. Real estate sector shared views on the same.

Amarjit Bakshi, CMD Central Park said, “Both the global situation and domestic inflation didn’t leave RBI much leeway. The recent 50bps surge was a foregone conclusion. While this and recent past rate hikes will impact the real estate sector, particularly the affordable and the mid segments, I can only hope it achieves its stated goal of controlling inflation. But the boom in Indian economy, the impact of the current rate hikes will be cushioned.”

Bharat Kumar, Director, Spaze Group said, “Increase in the repo rate up to 50 BPS was expected as it is a response of interest rates hike in the US federal bank. The step may increase the construction cost, but the market sentiments will counterbalance its effects resulting in no change in demand. Last quarter of the year has always been better for the real estate sector and any little change in the monetary policy does not impact sector in terms of demand and sentiment.”

Robin Pahuja, Director, ElitePRO said, “RBI balanced on a razor’s edge by announcing a marginal increase of 50 basis points. It had little room due to retail inflation, the conflict between Ukraine and Russia, and a spike in lending rates by central banks around the world. On the other side, the effect on real estate, particularly the commercial sector, is unquestionable. Developers will see a rise in project financing costs, and the bulk of our retail customers will see an increase in their EMI payments, which will result in an overall price increase for consumers. Despite this, the economy is expected to grow, and India, which is on a growth trajectory, has the capacity to withstand the interest rate increase and continue on.”

Ajendra Singh, VP, Sales Marketing, Spectrum Metro said, “The RBI lifted the Repo rate by 50 basis points, from 5.4% to 5.9%, in an effort to reduce inflation. This is a great way to reduce the input costs for developers, even though it would raise loan interest rates. Regarding the real estate market, there is little cause for fear because residential and luxury projects are already in high demand because of the affordability of the buyers. The hike can be conveniently balanced owing to the festive season, resulting in high demand for projects across all segments. The real estate market shall continue to grow along with buying capacity of people.”

According to Rajesh Saraf, MD, Axiom Landbase, “In an effort to slowly and steadily curb inflation, the RBI has announced another increase in the repo rate of 50 basis points. Since it is still relatively low compared to other regions of the world that are going through a similar crisis, the increase in repo rates from 5.4% to 5.9% is quite insignificant and can be conveniently reduced. The increase was widely anticipated, and the RBI handled it successfully by implementing a little adjustment. Although it might have a short-term effect on homebuyers as the loan interest rates would increase, overall, this would be beneficial for the real estate sector.”

Expressing his views on the same Kushagra Ansal, Director Ansal Housing said, “RBI announced 5.9% increases in repo rates today. The realty sector market is presently in a strong position, and it is expected that the prices will increase and demand will be strong for the ensuing future.”

Ashwani Kumar, Pyramid Infratech said, “In its monetary policy review, the Reserve Bank of India (RBI) increased the policy repo rate by 50 basis points (bps) to 5.9%. In the current fiscal year, the repo rate has increased four times. The RBI made the decision to abandon its supportive approach while promoting growth during its Monetary Policy Committee (MPC) meeting. Home loans are still quite affordable in pricing. Thus, consumer lenders continue to be in a favorable position overall with regard to the Instalments they should pay.”

Sumit Agarwal, Director sales and leasing, Grandthum said, “The hike in repo rate was quite necessary to balance the inflation across the globe due to pandemic effects, war around the trade routes and increasing prices of raw material. RBI’s decision to implement a rise of 50 basis points is justifiable as it would not impact the overall demand in Real Estate sector. The real estate segment has been doing well due to a demand of Grade A projects and the festive season round the corner. This hike can be easily assimilated as per the recent trends.”

Dheeraj Bora, Marketing Head, Paramount Group said, “The repo rate is the rate at which the central bank lends short-term cash to banks. Today, RBI has announced a 50 basis point increase in the repo rate, ramping up its fight against stubbornly rising inflation. Home loans may soon become much more expensive due to this repo rate hike. It might have a minor impact on home purchases during the festive season quarter, particularly in the affordable and semi home segments.”

Dushyant Singh, Director, Orion one32 said, “RBI’s step to increase the repo rates by 50 basis points has created a tense situation for investors as it will bring a hike in loan interest rates. However, it can be dealt with quite conveniently because of the festive season. Also, this will somehow be helpful for the realtors to deal with the rising input costs. RBI has taken an efficient measure to curb inflation due to increasing prices and unfavourable conditions in various regions of the world.”

Deepak Kapoor, Director of Gulshan Group said, “According to inflation, the market had quite a bit of expectation for the RBI’s rise of 50 basis points. The higher loan interest rates that were harming real estate buyers were the cause for concern. However, the announcement made it quite obvious that there would be a rate hike, keeping the market somewhat more expensive because of the tremendous demand for both commercial and residential developments. As purchasers’ buying capacity grows, financial stability continues to be a top objective, leading them to invest in commercial projects that regularly promise significant returns. The demand for residences would ensure that the real estate market remained strong.”

Vishal Sharma, Vice President wealth management of Berkshire Hathaway Home Services Orenda, India said, “ Even though the current RBI rate hike by 50 BPS has been much thought out but as far as the real estate sector is concerned, it is going to affect the real estate sector. For one, unlike the usual comments that mostly talk about the impact on retail loan schemes, such as home loans, the RBI rate hike also affects institutional loans. As a result not only the cost of borrowing for builders will increase but will also lead to a hike in the cost of home loan for home buyers as well. Every rate hike by Central Bank will have ripple effect of financial products too.”