The housing segment may see some decline in overall sales volume; here’s why
As widely expected, the Reserve Bank of India kept the repo rate and reverse repo rate unchanged at 4% and 3.35%, respectively, while maintaining an accommodative stance at its first FY21 meeting on Wednesday.
Comment on RBI Policy announcement, real estate experts said with consumer inflation still on the rise, the RBI intends to monitor it in the coming months. India is witnessing its worst second wave of COVID-19, raising some uncertainty. On the positive side, the real GDP forecast for 2021-22 remains strong at 10.5% in the wake of the vaccination campaign in full swing in India.
“While repo rates will remain the same and mortgage rates will remain stable, the incentive period for lower rates (from 6.7%) expired on March 31. SBI has already returned to normal rates and other banks will follow suit. This may have some impact on housing demand, particularly in Maharashtra, where stamp duty cuts, coupled with the lowest mortgage rates on record, have significantly boosted housing demand. Now, with the stamp duty reductions not being extended and the benefits of the lowest home loan rates also being reduced, we might see some decline in overall sales volumes, ”said Anuj Puri, President of ANAROCK Property Consultants.
Some developers, however, believe that the RBI’s decision to keep the repo rate unchanged is understandable at this point and will cause home loans to continue to stay at attractive rates, which also bodes well for sentiment. buying a house.
“Residential demand is picking up in the context of the pandemic and this should be encouraged. A further cut in key rates would have given a boost to the current rise in demand that we have seen recently. Our country is rapidly recovering from the slowdown induced by Covid due to the recovery in domestic consumption – which has greatly benefited from the favorable interest rate regime, the infusion of liquidity as well as stable returns on real estate investment by compared to other investment vehicles, ”said Lincoln. Bennet Rodrigues, Founder and Chairman of the Bennet & Bernard Group, known for their luxury vacation homes in Goa.
The IMF has projected an impressive 12.5% growth rate for India in 2021, stronger than that of China, which bodes well for the real estate sector as well. “As the economy is gradually opening up and getting back on track to restore the lost momentum, we believe that special attention should be paid to the real estate sector which contributes significantly to the country’s economic growth,” said he added.