Repo Rate cut to boost Indian real estate

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The recent repo rate cut by the RBI Governor is expected to boost the Indian economy, spearhead real estate investments, tackle liquidity constraints and aid the progress of ‘Housing for All’.

The 25 basis points repo rate cut by Reserve Bank of India’s Governor, Raghuram Rajan, has been highly lauded by the real estate stalwarts. In the last 18 months, this is the fifth rate cut and the effective cumulative reduction is 1.5 per cent. This has brought the policy rate to 6.5 per cent, which is the lowest since 2011. Experts believe that this cut holds the potential to give the much required fillip to the realty market, which has been eyeing signs of revival for a long time now.

Also Read: Will the RBI Policy Review actually make home loans cheaper now?

Some of the major outcomes expected out of this mega-announcement are –

1. Boost to economy – Considering the inflation and Consumer Price Index (CPI), the rate cut was much required and is a balancing move in the right direction. It will boost liquidity in the market and thus help in spearheading growth of the economy. Reiterating, Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO says, “The cut in repo rate is a positive development for the Indian economy and will certainly help in reviving sentiments among masses. This move will steer growth and is expected to infuse more liquidity in the system.”

The move will surely have a positive impact on the economy as well as across sectors, at large.

Ashish Raheja, MD, Raheja Universal 

The RBI has given positive signs wherein the CPI inflation is assumed to come down to 5 per cent and the GDP is expected to rise to 7.6 per cent by the end of the current fiscal year. These show that the market is on an improvement spree.

Ashok Gupta, CMD, Ajnara India Ltd

2. Boost to real estate investments – Since real estate is highly sensitive to interest rate movement, the sector will be one of the major beneficiaries of this move. In line with the decisions taken by the Government in recent times by way of clearing the Real Estate Bill and passing the Model Building Bye Laws to improve ease of doing business in the real estate sector, the decision to cut repo rates is likely to spur demand in the housing sector.

This decision is a welcome step in the direction of encouraging investments in the country, and in creating demand in the real estate sector as well.

R K Arora, Chairman, Supertech Group

RBI’s decision is a positive step and will attract genuine end-users to the market. If banks pass on the benefits to home loan borrowers, it would help revive housing demand.

Rattan Hawelia, Founder & Chairman, Hawelia Group

The RBI’s decision will lead to increase in property demand in the days to come. This definitely is a good sign for our sector. The lowering of the repo rate will also help in lowering the negative sentiments in the real estate sector as a whole.

Sam Chopra, Founder & Chairman- RE/MAX India

3. Enhanced liquidity in the market – Both the banking as well as the realty sector have been reeling under liquidity constraints. However, the reduction in rates would ease the liquidity issues in both the businesses. In the real estate sector, it would eventually boost sales by encouraging home buyers to finalise their purchasing decision, especially activating the fence sitters.

Improving the transmission of the benefits of rate cut and addressing the liquidity shortage, this move is expected to provide positive impetus to the real estate sector.

Deepak Kapoor, President CREDAI Western U.P.

There might not be any direct benefits visible at the moment. However, investments are sure to increase fund flow in the market which in some way will pump more funds in the real estate sector as well.

Rakesh Yadav, Chairman, Antriksh India

4. Boost to Housing for All mission – Last but not the least, the repo rate cut is expected to boost the government’s most ambitious plan – Housing for All by 2022. Manju Yagnik, Vice Chairperson, Nahar Group says, “The move will give a thrust to the ‘Housing for all’ initiative that has the potential of creating jobs, improve social infrastructure and give a boost to the Indian economy as a whole.”


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