Hit by slowdown in sales coupled with few new launches, the real estate sector says it is disappointed by the Reserve Bank of India’s move to hike the repo rate.
The move will increase lending rates for customers and borrowing rates for developers, they say.
Brotin Banerjee, MD and CEO, Tata Housing, said, “Higher interest rates will affect investment in the realty sector. Demand for housing has already been sluggish for quite some time and the RBI move is likely to make matters more difficult for an industry. Higher rates will make it difficult to meet the objective of low-cost and affordable housing for the poor sections of society and for the middle class, respectively.”
David Walker, Executive Director, SARE Homes, felt that the move will have a short-term impact on demand, which is of concern given the slowdown in growth, but is required for price stability, which brings with it higher consumption and investment in the medium to long term.
A similar thought was echoed by Samantak Das, Chief Economist and Director Research, Knight Frank India, who said it will throw an adverse signal to the real estate market in the short term.
Pradeep Jain, Chairman, Parsvnath Developers, said, “This move would encourage banks to increase their lending rates which are already beyond reach. It will demoralise home buyers, who already prefer fence-sitting due to the unstable political scenario.”
Sanjay Dutt, Executive MD, South Asia, Cushman and Wakefield, added, “A lowering of rate would have induced some of them to consider a home purchase and benefited sales.”