RBI decision to keep interest rates unchanged disappoints the real estate fraternity

The decision of the Reserve Bank of India (RBI) to keep  has disappointed the real estate fraternity that has already been reeling under a slowdown.

RBI Governor Raghuram Rajan has key policy rates on hold in his second bi-monthly monetary policy review, the first under the Modi regime.

According to Shrikant Paranjape, Chairman, Paranjape Developers, both home buyers and developers are disappointed with the RBI leaving the interest rates untouched. Paranjape said that this would have a negative impact on the already suffering real estate sector.

“We had expected the new government to bring hope to the real estate sector and the industry was looking forward to some relief in the form of interest rates being brought down. Business is already slow and I do not see a recovery soon.” said Paranjape.

Hemant Naiknavare, Vice President, Credai Pune Metro and Director, Naiknavare Developers, said that it would be favourable for the government to bring down the home interest loans to a single digit from the existing 10 to 11 per cent. He said that prospective home buyers are finding property rates and home loan rates quite high to make property purchases. “Housing is the biggest barometer of a country’s economy. There is a need to bring down the home loan rates to almost five per cent to fulfil the aspirations of home buyers,” Paranjape said.

Sanjay Dutt, Executive Managing Director, South Asia, of real estate consulting firm Cushman & Wakefield, said that the RBI’s stance to keep key rates unchanged was expected. “The RBI has stuck to its stance that there will be no rate cuts unless inflation is tamed. However, we anticipate that this is the end of a liquidity tightening cycle. We expect that the annual budget and monsoon will be key factors on the basis of which RBI will begin easing the interest rates.” Dutt said.