Real Estate Industry Reacts to RBI's Decision to Retain Interest Rate at 6.50%

The Reserve Bank of India (RBI) has decided to retain its repo rate at 6.50% for the 11th consecutive time, a move aimed at maintaining price stability, as stated by RBI Governor Shaktikanta Das following the Monetary Policy meeting. This decision comes after India reported a slowdown in GDP growth during Q2 of FY25 and an inflation rate rise to 6.2%, surpassing the RBI's threshold limit.

The decision has drawn varied responses from stakeholders in the real estate industry. Aman Gupta, Director of RPS Group, highlighted the positive impact of the RBI’s consistent approach on the real estate sector. "The stability in home loan rates has brought renewed confidence to the market, with housing inquiries increasing by 12% in the current quarter," he said.

Sandeep Mangla, Managing Director of Forteasia Realty Pvt. Ltd., emphasized that the RBI's decision to keep the repo rate unchanged fosters balanced growth. "This stability benefits developers by ensuring fixed borrowing costs, leading to better project execution," he explained. Mangla also pointed out that the unsold stock of properties has decreased by 18% year-on-year, reflecting the positive effect of rate stability.

Anurag Goel from Goel Ganga Developments commented on the benefit to homebuyers, noting that the stabilization of home loan rates at approximately 8.5-9% has made EMIs more affordable, increasing the pool of potential homebuyers, especially in tier-2 cities, by 15%.

Ashish Agarwal of Enzyme Office Spaces acknowledged the RBI's understanding of the real estate market's needs. With construction costs plateauing and interest rates steady, developers can focus on project execution, resulting in a 22% rise in delivery rates compared to the previous year.

LC Mittal of Motia Builders Group stressed the importance of stability for new projects, highlighting the role of real estate in contributing up to 7% of India’s GDP. He believes that maintaining rate stability will also foster growth in allied industries.

Kaushal Agarwal from Guardians Real Estate Advisor noted that the RBI's move to lower the Cash Reserve Ratio (CRR) to 4% will improve liquidity and enable more lending by banks, further benefiting the real estate sector. While a rate cut would have been ideal for boosting housing demand, Agarwal believes the current measures create favorable conditions for growth.

With India’s revised GDP growth forecast for FY25 at 6.6%, the real estate industry remains hopeful that continued liquidity and supportive policies will help drive further growth in the sector.