Hyderabad: The decision of Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) to hike the repo rate by 25 basis points to 6.50 percent is likely to impact residential realty market in Hyderabad. The market may become expensive.
Though, the rate hike provides elbow room to RBI to look at the incoming data, it is likely to result in rise in the interest rates on loans thereby making the realty market expensive in Hyderabad and other cities in the country.
What is repo rate and how it impacts loan interest rates?
The banks in the country gets the money either in the form of deposits or loans from RBI. These amounts are given to individuals or companies on loans.
As one of the source of fund is loans from RBI, any hike in central bank’s lending rate i.e., repo rate impacts various banks’ interest and lending rates.
The rise in banks’ lending rates makes loans including home loan expensive.
It is not the first time, earlier too, RBI hiked repo rate to put a curb on inflation and bring it in the range of 2-6 percent.
Real estate in Hyderabad emerged as second-most expensive market in 2022
In 2022, residential realty market in Hyderabad emerged as second-most expensive due to rise in home loans and property prices.
As per Knight Frank’s Affordability Index 2022, Mumbai is the most expensive real estate market wherein the home loan EMI of an average household is 53 percent of income.
In Hyderabad’s real estate market, the home loan EMI to income was 30 percent in 2022.
Despite being the second-most expensive market in India, Hyderabad’s residential realty market has emerged as a top choice for NRIs.
The highest percent of NRIs residing in the US, Canada, Gulf, Europe, etc. prefer housing units in Hyderabad.
