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  • Thursday, March, 2019| Today's Market | Current Time: 03:06:42
  • The Increase in Repo Rate and its Impact on Real Estate Industry

    Published on August 6, 2018

    The Reserve Bank for the second time in two months has increased its repo rate by 25 basis points on inflationary concerns, making it to 6.50 %. The real estate sector is likely to be affected by post-RBI’s decision, according to property developers and consultants.

    As per Realtors’ body NAREDCO, this increase will negatively impact buyer sentiment with the logical result on the quantum of sales.

    On the other hand, some of the developers welcomed the decision. Rahul Singla, Director, Mapsko Group said, “As a developer, we are welcoming this step taken by the government. The Reserve Bank of India has increased the key repo rate (the rate at which the central bank infuses liquidity in the banking system) by 25 basis points to 6.50%. It is likely to impact the sentiments of the buyers. We hope that financial institutions may cut down on their lending rates for their customers.”

    Some of the developers think with the recent policy changes, the real estate sector will not face much of the effect.

    The repo rate has increased again by 25 bps to 6.50%. With the introduction of RERA, there is transparency in the sector and the rise in repo rate is not likely to hurt the sentiment of the buyers. We also hope that the RBI would relax its monetary policies in the near future which can drive demand and sales in the market,” Said Gaurav Mittal, MD, CHD Developers.

    Mr Ssumit Berry, Managing Director, BDI group, said, “The increment in the Repo rate may seem to dampen sentiments in the market but for the real estate fraternity, it may have little or no impact. As almost all home loans these days are on floating rates, the increase and decrease in home loan rates do not impact the working of residential real estate sector much and tends to balance each other in the long term.”

    Now as there is an increase in the repo rate, there are dozens of assumptions made, but time will only show its impact on the real estate industry.