Tag: Repo Rates
Anuj Puri, Chairman – ANAROCK Property Consultants
The recent stand-off between the government and the RBI owing to the NBFC crisis and the apex bank’s endeavour to maintain its autonomy and reserves had caused the industry to watch closely whether the repo rate will increase or remain unchanged.
That said, today’s move by the RBI to keep the repo rate unchanged at 6.5% was more or less expected. This was not solely because inflation targets are still under control.
Politically, an upward revision would not have served the current Government well as the 2019 elections are around the corner. From the economic standpoint, a hike in repo rates would have had a direct impact on home loan rates.
High housing loan interest rates are known deterrents to many buyers, especially in the affordable segment where higher interest rates can and do weaken sentiment.
Any move to further discourage customers from availing of bank credit would ultimately exacerbate the liquidity crunch and adversely impact the economy.
From that perspective, the unchanged repo rate will at least keep the demand for housing loans at status quo.
The RBI obviously needs to maintain an adequate buffer for the economy – especially in light of the massive changes that are likely to come about in the next few months in form of REITs and SPVs.
Anuj Puri, Chairman – ANAROCK Property Consultants
- Miracles have been known to happen when a chequebook lies on the negotiation table
Stamp Duty Shocker
On the real estate market, upward revisions of any kind can doubtlessly hurt. Let’s take the Maharashtra Government’s proposal to levy a surcharge of 1% on stamp duty, effectively raising it to 6% from the existing 5%.
Such news, especially at a time when MMR’s real estate market was beginning to show some green shoots of revival with sales and new supply numbers rising, come as a shock.
This is a significant increase in the cost of real estate purchase that will hamper consumer sentiment – especially in the affordable housing segment.
On the one hand, the Government has rolled out multiple sops to boost affordable housing – and on the other, it is increasing the cost of properties. One can only hope that at least affordable housing is saved from this surcharge.
This is real and painful, and the impact is very hard to mitigate.