The
Reserve Bank of India (RBI) has cut the Repo Rates for the third time
in 2015, this time too by 25 basis points, effective immediately.
After multiple events
instilling hopes of a better real estate market in the last few days,
there’s another one that has brought cheer amongst the industry folks.
The Reserve Bank of India (RBI) has cut the Repo Rates for the third
time in 2015, this time too by 25 basis points effective immediately.
The rate has been brought down from 7.5 per cent to 7.25 per cent.
The move has definitely been welcomed by the real estate fraternity
and has raised hopes of improving market conditions plagued by unsold
inventory of housing units since a long time.
Pradeep Jain,
Chairman, Parsvnath Developers Ltd says, “Considering that the realty
sector has been struggling with increasing inventories and low housing
demand since last few quarters, it was an expected move.
We hope for the
banks to pass on the benefit to the customers, thereby, stimulating the
overall demand.”
Though it is seen as a positive move, the industry finds the rate cut
inadequate and longs for more to have a considerable impact. Rakesh
Kumar Arora, Chairman, Supertech Ltd says, “The announcement to cut the
repo and reverse repo rates by 25 basis points is not sufficient,
although it is an indication of the positive approach of RBI towards
investment in the country.
The Industry was seeking a cut of at least
one per cent to bring back confidence in home buyers and investors, ease
out EMIs and give a fillip to housing demand.”
Expressing further displeasure, Arora says, “Reducing funding costs
in real estate is the need of the hour as it would only bring in more
investments and create more jobs. However, the RBI has not addressed
this crucial issue.”
No change in the home loan interest rates, despite frequent cuts in
repo rates, is also being seen as a major setback. Lalit Kumar Jain,
CMD, Kumar Urban Development Ltd and Former Chairman, CREDAI believes
this step to be gradational in renewing the zest of the real estate
sector, however, says, "The net effect has to be translated into an
interest rate cut, that has not happened as yet. Despite the RBI cutting
the repo rate by 75 basis points in recent past, the net reduction by
banks has not been more than 25-30 points.”
While the move may not seem to have impressed many developers due to
its poor impact on the property prices, customer sentiments and sales,
it still has been welcomed for its potential to trigger improvement in
the realty space. Amit Modi, Director- ABA Corp and Vice President,
CREDAI Western UP says, “While it is indeed a step in the right
direction, 25 basis points cut may not be enough to spur the investment
cycle. There is definitely more required, and lending rates will have to
further come down by at least one or two percentage points to improve
the general sentiment towards investments in the country.”
