Tag: Repo Rate

Business

Unchanged Repo Rate Supports Affordability, Confidence in Housing Market

Jun 7, 2024 by Sujata Muguda 0 Comments #Anuj Puri, #Chairman - ANAROCK Group, #PMAY Urban, #Repo Rate, #Reserve Bank of India

Anuj Puri, Chairman – ANAROCK Group

Anuj Puri,

The Reserve Bank of India‘s decision to keep the repo rate unchanged is a boon for the Indian real estate sector. This stability ensures that home loan interest rates remain low, making housing more affordable for potential buyers. With unchanged borrowing costs, both developers and homebuyers benefit from increased market confidence and predictability.

The mid-range and premium property segments together account for more than 55% of the current supply. Together, they recorded approx. 76,555 units sold in Q1 2024 – nearly 60% of the total sales. The buyers of this segment are sensitive to volatile interest rates, and upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments.

The affordable housing sector is, of course, most cost sensitive. While PMAY Urban has sanctioned 118.64 lakh homes against a demand of 112.24 lakh homes, affordable housing (homes priced under INR 40 lakhs) sales in Q1 2024 recorded 26,545 units – a mere 20% of the total sales. However, as we have seen, unchanged home loan rates alone are insufficient to induce new vibrancy in the affordable segment. It is hoped that the government will soon introduce further incentives to support it.

With the mandate of a stable government now manifest in an unchanged monetary policy, the housing sector’s overall growth momentum will continue.

Business World

Realtors expected more from RBI MPC

Apr 8, 2021 by Neel Achary 0 Comments #Repo Rate

The RBI has maintained its accommodative stance until it sees an appropriate time to drive economic growth without jeopardizing its key goal of taming inflation. With the recent increase in Covid 19 incidents, the Apex bank is faced with the challenging task of balancing inflationary pressures to avoid a rise in borrowing costs. To keep inflationary pressures in check and sustain financial stability, it is expected that the central bank to pursue policy normalization in the second half of FY22. While it is understandable that the repo rate remains unchanged, the real estate sector’s need for special steps cannot be overlooked.

Ashok Gupta, CMD, Ajnara India, adds, “The repo rate remains unchanged at 4% which is the sixth time in a row, but we can still expect some support from the Union government and RBI in their upcoming policy meetings to help the industry recover. Its accommodative stance is positive for the real estate sector, which has witnessed some positive movement in demand for the past few months. We can hope that banks will lend strongly to support the sector, leading to the crucial sector in Indian Economy to attract borrowers, as earlier several banks have already provided some exemptions on transaction fees and other related costs.”

Praising the unchanged repo rate step, Vijay Verma, CEO, Sunworld Group, said, “It will continue to give the required liquidity cushion to the sector, where leverage plays an important role. The accommodative stance of the RBI repo rate move to keep it unchanged was much expected because earlier, there were no such announcements made, especially for the real estate sector in the last Union Budget. With this move of RBI, a great relief to the sector in the new financial year is likely to prevail.”

Buyers are returning to the sector after realizing the value of real estate assets backed by historically low EMIs, but developers, too, need some assistance to speed up the development process. “A sector that contributes significantly to the GDP requires assistance, and developers are expressing their concerns for the government to pay attention to their demands,” says Dhiraj Bora, Head Marketing & Communication, Paramount Group.

Because of the global pandemic crisis, the world is suffering one of the worst economic crises, and real estate, among other industries, is feeling the pinch. Harvinder Singh Sikka, MD, Sikka Group, says, “Rates on repurchase agreements are now at record lows, benefiting consumers. However, real estate is undergoing a difficult era, and we hope that the RBI will come out with some direct measures that would help the sector prosper.”

Realtors unanimously say that they expected that the RBI would keep the repo rate unchanged. Throwing light on the RBI MPC decision Uddhav Poddar, MD, Bhumika Group, says, “The Apex Bank has kept its repo rate unchanged, which was in line with expectations. it’s clear that the apex bank is taking an accommodative stance. The RBI has played a pro-active role and has taken multiple measures for various industries and sectors in recent months. While the real estate sector needs several measures, and we expect a push from RBI to the banks to disburse loans to the sector”.

The need was the influx of funds that could help the developers complete the projects on time and gain the trust of buyers, resulting in the sector’s revival. “Last-mile financing is needed in real estate, and unpaid loans are a roadblock; one-time loan restructuring would force banks to accept developers’ collateral conditions, allowing developers to complete stalled/delayed projects. The situation in 2008 emerged as a result of the Lehman Brothers crisis, and at the time, loan restructuring assisted in reviving the market, which saw property capital appreciation in 2010 after a two-year lull. We are now in a similar situation, and the sector needs government assistance,” says Dhiraj Jain, Director, Mahagun Group.

Kushagr Ansal, Director, Ansal Housing, adds, “We expect the new lending support of Rs 50,000 crore to Nabard, NHB, and Sidbi to have a positive effect on the liquidity situation. We must realize that the sector needs assistance in coping with unfinished projects to close the demand-supply gap. Since people realized the value of real estate properties, demand is at an all-time high, and the developer community needs the government’s support to ensure that everybody has a home.”

Calling for the need to announce direct packages for the sector, Sagar Saxena, Project Head, Spectrum Metro, says, “It is time for the government to pay heed to the sector’s long-standing demand for industry status. We foresee the government taking direct sector-specific steps rather than delivering packages with limited effects on real estate.”

Concludes Vikas Garg, Deputy MD, MRG World, “While the government has taken some measures in recent months to help the sector, such as introducing stress funds and stimulus packages, further changes are required to help the sector grow. Without sufficient government funding for developers, it would be difficult to retain real estate demand.”

Business World

RBI maintains status quo, realtors rely on increased demand

Dec 5, 2020 by Neel Achary 0 Comments #RBI, #real estate, #Repo Rate

The RBI maintained status quo as the MPC voted unanimously to hold rates steady. The repo rates have kept unchanged at 4%, and the RBI expects positive growth in Q3 and Q4. The real estate sector was expecting some additional announcements; however, the sector has to rely on the announcements made in the last few months only. Real estate experts feel that the demand is high, and the latest status quo of the RBI will not have any negative impact on it.
The announcements of repo rate cuts by the apex bank during the lockdown have helped the reeling sector of real estate. Apart from the rate cuts, RBI has also gone ahead with measures such as rationalization of risk-weightage norms, restructuring of loans based on the projects, linking home loans to LTV, the intensity of policy changes made within a span of few months reflect the positive intent of authorities to support major sectors like real estate. “The onus to lend continuous support lies entirely on banks’ quick disbursal of funds. Home loan interest rates are at their lowest, which has already shown a positive impact during the festive months in the residential segment. The upcoming quarter is likely to witness more of it and register a positive curve,” says Yash Miglani, MD Migsun Group.

Maintaining that the RBI’s recent decision to maintain the status quo was expected due to the pace observed in the market around festive times, Vijay Verma, CEO, Sunworld Group, says, “Apex bank has also gone beyond the usual changes and introduced notable policy changes over the past few months, aiding both buyers and developers. This has brought a certain extent of vibrancy in the market, post the stillness in the market that lasted almost a quarter. The flexibility to cut rates if the economy needs support indicates a positive signal for the future. Residential real estate backed with festive offers and deferment payment plans has been fairing well post-unlock. We are hoping with GDP growth for 2021 projected at -7.5% the realty sector can contribute a significant share in the overall economic development.”

The sector is already optimistic, and the sales figures over the last few months are an indication that buyers are enjoying the low home loan interest rates. “Real estate sales have improved, especially after home loan interest, and it will further improve if other states reduce stamp duty after the announcements made by Maharashtra, Karnataka, and Madhya Pradesh. The sector will benefit a lot as the demand is already high and reduction in stamp duty will provide a further boost,” says Ashok Gupta, CMD, Ajnara Group.

Talking about the commercial segment, Sagar Saxena, Project Head, Spectrum Metro, says, “We are happy that the RBI is optimistic about the GDP growth. The foremost beneficiary of such a positive outlook in real estate would be the retail segment as it depends on consumer spending and business expansions. The demand for office spaces and commercial places is already witnessing a significant jump, and people are coming out to spend in malls.”

Adds Ashish Bhutani, MD, Bhutani Infra, “For the commercial segment, we were expecting that the RBI would come up with specific announcements that could boost investment. However, we understand the status quo stance as there was limited possibility of changing the repo rate below 4%. Last substantial announcement for the commercial segment was in February when the RBI permitted an extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate. The segment is in dire need of liquidity, which also depends on the priority lending status, and we hope that the segment will get adequate liquidity as the RBI in this MPC announcement has said that it will maintain the liquidity in the market.”

Commenting on the latest stance of the RBI, Dhiraj Jain, Director, Mahagun Group, says, “The government and the bank have taken multiple steps in the last few months. If quick implementation takes place, then many problems will get resolved. One such announcement was the loan restructuring that will help stuck projects bringing in more projects in the market. The Apex bank has shown positive outlook for GDP growth in the coming quarters, and this would definitely have a healthy impact on the real estate sector too.”

In the last few months, the government and the RBI took decisions intended to move towards the path of economic recovery, and real estate was looking for packages that can help them speed up the pace. Ankur Bhatiani, Director, Urbainia Spaces says, “Though we understand the stance taken by the RBI, we still feel that real estate sector needed announcements that could have an immediate impact on delivery and sales. Now, the need is that RBI should ensure that the past announcement should get implemented with earnest. The sector has yet to see the major impact of those announcements. We hope the individual banks will take necessary steps and keep the real estate sector in their priority lending list.”

Realtors say that buyers are now back, and the sector will now depend on the delivery of the projects to instill more confidence in the market. Harvinder Singh Sikka, MD, Sikka Group, says, “We were following the various reports, and were ready for the status quo of the RBI. We feel that the sector, which contributes towards the economic growth of the country, should get special attention. The RBI should ensure that banks extend lending support to the sector.”

Dhiraj Bora, Head-Marketing and Communication, Paramount Group, adds, “We should praise the RBI for extending a helping hand to the real estate sector as it has taken care of the interest of buyers and developer in the last few announcements. Till the next announcement, the sector has to work on deliveries and employing marketing tools that can augment the increased demand.”