The third bi-monthly policy announced a rate cut of 35 basis points in its benchmark repo rate.
We definitely welcome this move which will lift industry sentiments. The real estate sector has been looking forward to such initiatives to boost sales. It will support growth and ease the liquidity crunch in the economy. We hope that the current rate cut would translate into lower EMIs and help soften home loan rates and also boost sales. It will help to ease the pressure off the market by attracting buyers to invest in the real estate sector. Real estate sector is one of the few sectors which have the potential to kick start a sluggish economy. The forthcoming festive season will further boost real estate sector.
A wave of next gen reforms has set the stage for years of high growth for the real estate sector. Today’s rate cut of 35 bps is yet another initiative that is propelling real estate sector on a new growth trajectory. It has been observed that, despite the reduction in repo rates by the RBI in the previous reviews, it did not have any significant impact on lending rates. Going forward, it is imperative for banks to reduce the lending rates and ensure that the home loan borrowers reap the benefits of this move. Real estate being a highly cost sensitive sector, demand will only pick up if the cut is substantial to result in significant cost savings. The rate reduction will also provide the much-needed stimulus to build upon the various initiatives announced by the Government recently about reviving the demand in the realty sector. This will also bring back fence-sitters who were waiting for the perfect opportunity to invest in their dream home. We are sure to see the positive upturn in the sector.
On the whole, this rate cut along with various other reforms announced recently, is expected to cheer up developers as well as buyers in the real estate sector.
[Surendra Hiranandani is the Chairman of House of Hiranandani]