Anuj Puri, Chairman – ANAROCK Property Consultants

Overall consumption in India has taken a serious beating in the recent past, and the RBI needs to give a serious booster shot to hike up consumer sentiments.

A massive rate cut of at least 50 bps in the upcoming monetary policy could be meaningful since a cut of such magnitude would make it feasible for commercial banks to lower the interest rate substantially.

At the end of the day, only significant transmission of a repo rate cut can help revive much-needed consumer demand.

Real estate is a highly cost-intensive investment and demand for it will only pick up if the cut is deep enough to result in significant cost savings on home loans.

Over and above, even if a cut in the repo rate happens, banks will need to percolate it down to borrowers.

Also, it does bear keeping in mind that it is not only affordability but other factors such as low ROI and lack of confidence in under-construction projects that have impacted housing demand in recent times.

Reduced interest rates alone may not help kick-start a wholesale revival in housing demand for all budget segments.

Anuj Puri, Chairman – ANAROCK Property Consultants

As hoped for, the RBI has reduced the repo rate by another 25 basis points.

Back-to-back repo rate cuts by the RBI are indeed the perfect start to a new financial year, resulting in overall reduction of 50 basis points since February 2019.

The repo rate now stands at 6% – returning to the same level as in April 2018. This will augur well for the Indian real estate sector and keep the momentum going in the coming year.

As it is, the sector already saw an uplift in homebuyer sentiment due to the multiple sops offered by both the Government and the RBI in just the first three months of 2019.

These measures have contributed to a 12% increase in housing sales in Q1 2019 across the top 7 cities.

The RBI has done its part by slashing the repo rates. The onus is now on the banks to concurrently reduce home loan rates further, thereby encouraging more fence-sitters to take purchase decisions and giving another boost to the real estate sector.

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