CREDAI pitches for 50-bps interest rate cut to boost growth

Realtors' body CREDAI today said RBI should cut key interest rate by 50 basis points to boost housing demand as well as growth of the realty sector.
As widely expected, RBI today left the key interest rate unchanged in view of a rise in retail inflation to 4-month high and likelihood of capital outflows on a possible US Fed rate hike later this month.
"We respect RBI's decision. But we feel that there should be a reduction of 50 basis points in the interest rate for growth of the real estate sector," CREDAI president Getamber Anand told PTI.
He said growth of real estate has fallen in the second quarter of this fiscal.

Financial, real estate and professional services growth shrank to 9.7 per cent against 13.5 per cent a year earlier.
"Interest rates on home loan should come down to below 9 per cent," Anand said.

On RBI policy, CBRE South Asia chairman and MD Anshuman Magazine said: "This decision was largely expected by the industry. The multiple rate cuts initiated by RBI through the year have provided some relief to the economy and the real estate sector."
In a statement, he said: "While it will take some more time for the announcements to reflect at the ground level, the housing segment has seen stability and improvement in market sentiment. As we move into the New Year, we hope RBI will continue to monitor the situation and make necessary adjustments to boost the economy."

JLL chairman and country head Anuj Puri said RBI's recent cut of interest rates by 50 basis points was front-loading of policy action for the remainder of the year.
"With yesterday's announcement confirming a GDP growth rate of 7.4 per cent, which is very positive, and the fact that inflation is under control, we can certainly say the country's economy is on an even keel and is in particular need of special incentives to stimulate forward momentum," Puri added.
Commenting on the monetary policy, Parsvnath Developers chairman Pradeep Jain said: "Having lowered the repo rate by 125 basis points to 6.75 per cent from 8 per cent since January 2015, it was expected that RBI would maintain status quo in its fifth bi-monthly policy review."

While RBI has taken steps to considerably reduce rates, he said the interest rate transition from banks to consumers has been gradual.
Sare Homes MD David Walker sees chances of further rate cuts this month as "remote".
"As less than half the 125 bps rate reduction by RBI has been passed on to customers by banks, action by RBI to standardise the methodology to determine base rates which all banks will move to is welcomed," he added.