The recent 50 bps repo rate hike by the RBI in the midst of the festive season, though expected, has come as a bitter dose for the residential developers. There is a mixed reaction about the impact of this hike on residential real estate demand and growth. Torbit Realty presents views from the cross-section of the industry.
Niranjan Hiranandani, Vice Chairman, Naredco
A further hike in interest rates compounded with commodity inflation will act as a market dampener. The postponed consumption will hurt the housing market which is currently on an upward growth trajectory.
Harsh Vardhan Patodia, President, Credai National
The demand continues to stay robust and going forward, due to festive season sentiment, I expect it to do well in the coming months. Moreover, various festive offers by developers will contribute towards aiding the overall demand.
Venkatesh Gopalakrishnan, CEO, Shapoorji Pallonji Real Estate
RBI’s move may influence the buying sentiment of affordable to mid-segment home buyers. However the positive trend in business is likely to continue, and industry should be able to move forward . Additionally, the ongoing festive season is likely to bring in some positive movement as home ownership remains important for home buyers. This will eventually result in sales , especially in luxury and premium categories as developers are offering various incentives.
Shishir Baijal, Chairman & Managing Director, Knight Frank India
The repo rate hike translating into higher home loan interest rates will have its impact on the sentiments across all buying categories, especially in the wake of ongoing festive season. Going by the current trends , we expect about 50% of the hike to be passed on to home loan borrowers. This will impact affordability across the markets. We expect the Knight Frank Affordability Index to deteriorate by 2%..This might slow down home buying decisions for a short to medium term. However, steady economic growth and revival in consumer sentiment will bring back confidence among end-users and support home buying.
Dhruv Agarwala, Group CEO , Housing.cm, PropTiger.com and Makaan.com
Considering that a large number of home buyers in India make the purchase decision during the festive season, the banks and financial institutions are unlikely to immediately pass on the hike to customers. Even when they do so, the robust buyer sentiment along with renewed investor interest in the residential realty market is likely to continue.
Anuj Puri, Chairman, Anarock
As the home loans get dearer soon, with the latest repo rate hike, this could impact residential sales to some extent during the festive quarter, particularly, in the affordable and mid-segment housing. The home loan rate hike is in addition to input cost with the overall acquisition cost increasing further . However, the silver lining is that there will be only moderate impact until home loan rates breach the 9.5% mark.
Samantak Das, Chief Economist, JLL India
With the latest hike in repo rate, the revised home loan EMI would increase by an average 8-9% as compared to 6 months back. Home loan interest rates inching towards 9% and above may result in moderation of housing sales growth in the medium term.But then taking a cue from the previous transmission record, we expect home loan interest rates to go up by only 25-30 bps or these can even be delayed in view of the festive season demand. This will be a positive development considering that residential units sales have increased 2X during the first half of 2022 and the growth trajectory is maintained in Q3.
Pradeep Aggarwal, Founder & Chairman , Signature Global (India) Limited
Considering the ongoing festive season combined with high market sentiment, affordable and mid-segment housing is going to witness a huge spike in demand. We are highly bullish that sales would go up by 20-30% in this quarter and even on YoY basis sales will do well.
Saransh Trehan,MD, Trehan Group
Housing demand continues to remain robust despite subsequent interest rate hikes. In fact in many cities , the demand is improving. So, we do not see any major impact even after RBI’s latest hike in repo rate. However with home loan rates hovering between 8-9%, further tightening , if any , may well start to impact housing growth.
Suren Goyal, Partner, RPS Group
There will be limited impact of repo rate hike and the industry will continue to perform well . There are plenty of buyers both in cost-efficient and premium segments. Interestingly, expats are showing tremendous interest in real estate and the investor class is also attracted. The pandemic has also induced buyer interest in other categories such as plotted developments, villas, and farmhouses.