Credai, NAREDCO seek repo rate cut in next MPC meet to boost housing demand

Realtors apex bodies CREDAI and NAREDCO have sought a reduction in repo rate in the next monetary policy to bring down interest rates on home loans and further boost demand for residential properties.

The Reserve Bank of India (RBI) on Friday kept the repo rate unchanged.

Commenting on the decision, realtors apex body CREDAI National President Boman Irani said the country achieved high economic growth in the last fiscal on contributions from all sectors, including real estate.

"Coupled with other healthy macro-economic indicators and CPI at an 11-month low at 4.83 per cent recorded in last April, RBI possesses a strong opportunity to provide a sustained, formidable platform to further elevate this holistic economic development across industries," he said.

In the next monetary policy, he said the RBI should look toward "cutting the repo rates for the first time since February 2023, and offer lower lending rates that would boost consumer spending even more."

Realtors body NAREDCO National President G Hari Babu said the RBI's announcement to maintain the status quo on the repo rate is a good decision.

"However, the affordable housing sector urgently needs intervention. Therefore, in the next MPC meeting, a reduction in the repo rate will send a positive signal for this segment," he added.

Babu noted that the real estate sector has been performing exceedingly well and the industry as well as homebuyers look forward to further support from the government and the RBI.

Sanjay Dutt, MD & CEO at TATA Realty & Infrastructure, hailed the decision to keep the repo rate unchanged given the ongoing global economic scenario.

"The real estate sector is anticipating lower interest rates later this year...," he added.
 

This anticipation will help in providing an impetus for housing demand.

"Specifically, the demand for the residential segment in the Indian economy is expected to see significant growth, as lower interest rates will make home loans more affordable and drive more buyers into the market," Dutt said.

Samir Jasuja, CEO and MD of PropEquity, said the decision of RBI is on the expected lines.

"With overall inflation falling within the RBI range, a policy rate cut may not be very far away," he said.

"Real estate prices have gone up substantially and a future rate cut will give much higher purchasing power to the customer which is the need of the hour," Jasuja said.

Shrinivas Rao, CEO of Vestian, believes this is probably the last time RBI will maintain the status quo.

"The repo rate may start its descent from the upcoming MPC meeting as higher kharif production is expected amid an above-normal monsoon, easing the prices of food items," Rao added.

Dhruv Agarwala, Group CEO of Housing.com, PropTiger.com, said that the RBI's cautious stance reflects acknowledgment of persistent food inflation alongside a robust growth trajectory.

This move by the RBI ensures stability in interest rates for prospective homebuyers in the short term, he said.

"Nevertheless, the potential necessity for a downward revision of the repo rate remains pivotal for fostering future sectoral growth, particularly amidst mounting concerns over escalating property prices impacting a significant portion of genuine homebuyers across India," Agarwala said.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, said an expected above-normal monsoon should help control food prices and bring food inflation under control.

"This would prompt the RBI to perhaps lower interest rates towards the end of calendar year 2024 thereby further fuelling growth, especially in the real estate sector, particularly benefitting the affordable housing segment," Baijal said.

Gauri Tandle, CFO of Ashwin Sheth Group, said the RBI's decision to maintain the repo rate supports both the aspirations of individual homebuyers and the broader objectives of economic growth and stability.