The bottle has one choice left after the 9th rise reason, and it was agreed to maintain the [repurchase] policy rate at 6.5% in the RBI’s policy review on June 8, 2023. The economy is doing well by many measures, but it is having difficulty controlling inflation to provide way for other ideas. By adopting a neutral position, they eliminate the need or capacity to implement any policy changes, even in the future, making it more adaptable. Although the current borrowers, particularly the school creditors, are somewhat relieved by the rate stability, this is a long cry from the kind of demand that an easing of the rates could have created, particularly for the real estate sector. Based on cautious assumptions, the stable prediction for FY25’s GDP growth and inflation rates still leaves open the possibility of a medium-term growth rebound for India. That being said, there’s a chance that the growing excitement in the real estate market that was anticipated prior to the holidays won’t materialize. If those two approaches are not used, it appears that buyers and, of course, new homeowners, will have to deal with this moderate rate environment by either financial inducements or new market inventions or altered value proportions to encourage real estate sales and purchase transactions.
Anurag Goel, Director at Goel Ganga Developments
Based on cautious assumptions, the stable prediction for FY25’s GDP growth and inflation rates still leaves open the possibility of a medium-term growth rebound for India. That being said, there’s a chance that the growing excitement in the real estate market that was anticipated prior to the holidays won’t materialize. If those two approaches are not used, it appears that buyers and, of course, new homeowners, will have to deal with this moderate rate environment by either financial inducements or new market inventions or altered value proportions to encourage real estate sales and purchase transactions.
On the one hand, it offers a stable environment in which planning and investment may be conducted over the long term. On the other, it deprived the market of the increased demand which a rate cut could have delivered during the all-important festive period. There is no change in GDP and inflation estimates for FY25, indicating faith in the do-nothing policy. However, volumetric parameters in strategy may need to be revisited by property market stakeholders as interest rate cut policies are likely to be absent.
LC Mittal, Director, Motia Group
The RBI’s decision to keep the repo rate unchanged for the tenth time at 6.5% is acknowledged to be a reasonable move under the current circumstances given high inflationary tendencies. The shift to a neutral stance signals the RBI’s commitment to aligning inflation with growth, ensuring that the market conditions remain favorable for sectors like real estate. As for the lack of a hinge to echo any change in borrowing rates, we perceive home loan EMIs currently to remain steady, which would, in turn, positively impact demand in the housing market.
Aman Gupta, Director, RPS Group
The RBI’s neutral stance after a prolonged period of holding the repo rate at 6.5% indicates a cautious yet optimistic approach towards managing inflation and growth. In addition, while this decision reduces volatility in borrowing rates which are of concern to real estate contractors and individuals, it also calls for budgeting because the threat of inflation still exists. We believe this move will help maintain confidence in the housing sector, but continuous vigilance is required to adapt to any shifts in the economic landscape.
Keshav Mangla, General Manager Business Development, Forteasia realty pvt ltd.
Like every other major financial institution in the world, the RBI has experienced criticism of its decision to keep the repo rate unchanged at 6.5%, the tenth such posture in a row, while easing the stance to neutral. Such policy directed at mitigating growth in the economy versus controlling inflation has its consequences on the real estate market. For instance, the result of stable interest rates may not necessarily be the most favorable for homebuyers and developers as it cuts off the advantage that comes with decline in interest rates. On the other hand, with the onset of the festive season which is characterized by a matter of fact annual surge in property sales, the sector is likely to have to offer additional cuts in pricing in order to stimulate sales. It is doubtful that given the unchanged GDP growth and inflation targeting for FY25, the RBI continues to view such a policy mix as appropriate for efficient growth of the economy.
