October 6, 2023: The Reserve Bank of India on October 6, 2023, left the repo rate unchanged at 6.5% for the fourth time in a row. The move by India’s apex banks augurs well for the housing sector in India, which is betting big on the upcoming festive season to chart unprecedented growth based on peak demand this year.
The decision to maintain a status quo on the repo rate, at which the RBI lends funds to scheduled banks in India, was unanimous with all six members of its decision-making body, the all-powerful Monetary Policy Committee (MPC), approving it, RBI governor Shaktikanta Das while making the announcement after a three-day meeting of the MPC.
After increasing the key benchmark lending rate by 250 basis points (bps) cumulatively since May 2022, the RBI first decided to hit the pause button in April this year.
Impact on real estate
According to Samantak Das, chief economist and head of research & REIS at JLL India, the move is on the expected lines as the focus of the MPC is prioritising growth and giving demand stimulus during the ongoing festive season.
“The fourth pause in policy rate augurs well for the real estate sector, especially residential as the sustained affordability is reflected in the growing sales momentum. Residential sales for the first nine months of 2023 have already touched 91% of the annual sales of 2022. The synergy between steady interest rates and the ongoing festive season sentiment will lead to sales clearly outpacing last year’s numbers to a new high,” Das said.
Welcoming the RBI decision, Ankush Kaul, chief business officer at Ambience Group, said that this is a great scenario for individuals considering taking home loans to purchase their first homes, as most banks are expected to maintain interest rates in the single-digit range.
“The impact of this steady rate on the upcoming festive season in the residential real estate industry is poised to be substantial. It is likely to drive increased demand for homes during this festive period, as the combination of affordable financing and stable rates creates an enticing environment for potential homebuyers, fostering optimism in the real estate market,” says Kaul.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
