Mr. Ramani Sastri – Chairman & MD, Sterling Developers
The decision to keep the repo rate unchanged is a positive development for home buyers and investors, as it provides them with some stability and reduces uncertainty and volatility associated with interest rate fluctuations. India’s housing sector is witnessing a strong rebound in the recent past driven by various factors such as affordability, lifestyle upgradation and aspiration of customers to own homes and we see this up-cycle continuing in 2023 fuelled by both end-user and investor interest. Hence, in such a context, another repo rate hike by the RBI would not augur well for the real estate sector as home loan interest rates are already at a higher level. Any further increase in policy rates means that interest rates on home loans may hit an all-time high and touch almost double-digit, which could have a substantial impact on buyer sentiments and affordability, which in turn can curtail demand. Another hike would also lead to even higher borrowing costs for developers too. Hence, we expect a continuation of existing policy rates through 2023. Undoubtedly, a further reduction in interest rates in the near future would be preferred to bolster overall market confidence and make it more enticing for home buyers and support the growth momentum in the real estate sector.
Mr. Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury themed homes in Goa
In the residential real estate segment, buyer sentiment has continued to be robust and this has resulted in home sales showing an appreciable rate of growth. Hence, we welcome this move by RBI as it helps in holding the interest rates and sustaining the growth momentum in the real estate sector. While the rising interest rates in the recent past have certainly impacted the sales of rate-sensitive segments of affordable and mid segment housing, but it did not have any impact on the luxury housing. With the growing economy and an increasing number of high-net-worth individuals and aspirational middle-class millennials and Gen-Z, the demand for luxury properties has seen exponential rise. The rich are looking at residential real estate as a favourable avenue for end use as well as an investment due to high returns. As buyers become progressively more discerning in their choices for a signature style of living, they will be more willing than ever before to take the leap and purchase luxurious homes and this trend is expected to continue in 2023 and beyond given change in lifestyles. However, a reduction in the key rates going forward would be widely celebrated as low interest rates have been a crucial factor in the revival of overall real estate demand and improvement in the liquidity situation which is vital for the sector.
