MUMBAI: Terming the RBI move to maintain status quo on the policy rates as ‘disappointing’, real estate players said a rate cut would have helped reboot the market which is impacted by the implementation of the GST, Rera and demonetisation.
Citing surging inflation numbers, RBI left the short term lending rates unchanged at 6 %.
“The present macroeconomic situation in terms of higher than expected inflation and unexpected spike in fuel prices, the industry was not expecting a rate cut. However, a cut in the policy rate could have helped stimulate realty growth and demand which has slowed down after the note ban,” Knight Frank India chairman Shishir Baijal said.
House of Hiranandani chairman Surendra Hiranandani said if continuous price pressures are going to limit the room for further rate cuts then government will have to boost spending that may impact its budget deficit target.
“A rate cut now would not only have provided much needed cushion to the economy, but would have also added thrust to government initiatives on affordable housing. The real estate industry is already under immense pressure owing to rise in input costs which have put severe strain on profitability,” he said.
Cushman & Wakefield India managing director Anshul Jain said since the rate easing cycle started in January 2015, the rep rate has already come down by 200 basis points.
“This has led to home loan rates being revised downwards from 10 per cent to 8.35-9 per cent in the same period. However, we anticipate the primary residential sale market to remain subdued as end users are still assessing the impact of Rera and GST on projects,” he said.
Sheth Corp chairman Ashwin Sheth said although the rate was kept on hold to assess the impact of rising inflation, declining economic growth a rate cut at this stage would have been an ideal for home buyers who have been eagerly waiting for the rates to cut down.
“Government has already implemented stringent policies like Rera which is increasing the confidence of buyers. In the same vein, RBI too should have looked at the real estate sector with new optimism,” he said.
CBRE India & Southeast Asia chairman Anshuman Magazine opined that while the residential sector expects enhanced activity levels in the ongoing festive season, home-buyers hoping for a further dip in borrowing costs could still get some relief as some banks may consider lowering their lending rates to leverage the festive season.
Brick Eagle founder Rajesh Krishnan said there is a need to initiate a concerted drive to close the severe infrastructure gap, restarting stalled investment projects, enhancing ease of doing business, ensuring faster rollout of the affordable housing program and rationalisation of excessively high stamp duties by states.