Rate cut to spur housing demand: Realty firms

New Delhi

The Reserve Bank’s decision to cut key interest rates is likely to reduce borrowing cost for both home buyers as well as developers leading to increase in housing demand, realty firms and consultants said today.

They sought further cut in interest rates as well as policy reforms for the growth of realty sector, which is facing a huge demand slowdown in last few years.

RBI today cut interest rate by 0.25 per cent for the third time this year to spur investments and growth.

“Its a good move. Banks should now pass on the benefit to boost demand. Interest rate on home loans should be 9-9.5 per cent,” DLF’s whole-time director Rajeev Talwar told PTI.

Realtors’ apex body CREDAI President Getamber Anand termed RBI’s decision as good step but too less.

“Market was expecting bigger reduction. Banks should pass on the benefits immediately as per RBI direction,” he added.

Parsvnath Chairman Pradeep Jain hoped that banks would now pass on the benefit to the customers thereby stimulating the overall demand.

“Such liberal moves coupled with policy reforms are necessary for the revival of the real estate sector in our country,” Jain added.

CREDAI (NCR) President Manoj Gaur said the move has come as a breather for the real estate sector. He expected another 25 basis points cut in next 3-6 months time.

Property consultant JLL India Chairman & Country Head Anuj Puri said the downward revision in RBI’s repo rate will positively impact the sentiments surrounding the real estate market.

“Banks will now be able to offer loans at more attractive rates. Cheaper loans for home buyers will prompt a renewed interest in residential property purchase from end users and investors,” Puri said, adding that cost of funding for real estate developers should also reduce marginally.

Tata Housing Managing Director & CEO Brotin Banerjee said: “It is now important that cumulative rate cut amounting to 0.75 per cent since January this year, gets translated into the lending rates being offered by the banks and financial institutions to the consumers.”

Cushman & Wakefield Executive Managing Director (South Asia) Sanjay Dutt said RBI’s decision to cut repo rate would provide a much-needed stimulus to the economy.

“Given the tepid demand conditions in the real estate sector, a cut in repo rate bodes well to improve sentiments of home buyers and spur home-buying decisions. However, the actual impact can be seen only when commercial banks lower their lending rates,” Dutt said.

C&W said that the cost of borrowing could also decrease marginally for developers, who have been reeling under high funding cost and increasing cost of construction.

HDIL’s Senior Vice-President (Finance and Investor Relations) Hariprakash Pandey hoped that this rate cut would be replicated by the banks by reducing interest rates, which would not only accelerate demand for housing, but also boost manufacturing and ancillary industries too.

Knight Frank India CMD Shishir Baijal said this is a step in the right direction.

However, he said an additional reduction in the CRR would have given a bigger boost to the struggling realty sector by improving its cash crunch.

“We urge the banks to pass on the RBI rate cut benefits so that consumers and business boost consumption,” SARE Homes MD David Walker said.

Property consultant Colliers International Associate Director (Research) Surabhi Arora said the rate cut will help to reduce the overall burden for the residential buyers and may boost residential sales across the markets.

CREDAI’s past president Lalit Kumar Jain hailed the RBI’s announcement of repo rate cut by 25 basis points, saying that “steps like these are gradational in renewing the zest of the real estate sector.”

However, he said that 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 basis points.

Amrapali CMD Anil Sharma said the step to reduce repo rate would help bring positive sentiments in the realty sector.

Prashant Tiwari, CMD, Prateek Group said this repo rate cut by the RBI will further reduce the cost of funds to home-buyers as well as developers as it will allow the banks to lower the interest rates. “This will ensure the heightened property demand in the coming times”.

CREDAI-Western UP Vice President Amit Modi said easing of interest rate would help revive health of businesses like real estate which are highly sensitive to interest rate movements.

Hawelia Group Chairman Rattan Hawelia said this would have a significant impact in facilitating growth, while Fairwealth Housing MD Dhirendra Gaba said the RBI’s move would boost buying sentiments.

PTI