RBI’s repo rate hike may not affect housing sales

The RBI's decision to hike repo rate will affect consumers' buying sentiment, but it will have a moderate impact on housing sales in the affordable and middle-income categories, according to industry experts.

The interest rates on will rise and the affordability of buying homes will be reduced, because of a hike in repo rates by 50 basis points.

The impact will be limited due to pent up, as well as current festive demand, according to property developers and consultants.

Developers are already offering discounts and freebies to boost sales during the festival season, which may add to the deal to attract fence sitters.

Anarock Chairman Anuj Puri said that the repo rate hike will get dearer soon. This could affect residential sales during the upcoming festive quarter, particularly in the affordable and mid-range housing segments. In the July-September quarter, housing sales have risen by 40 -- 50 per cent despite a hike in interest rates and a rise in housing prices.

Puri believes that the impact will be moderate if the mortgage remains below 9 per cent.

Amit Goyal, CEO, India Sotheby's International Realty, which is a broker of luxury homes, said the hike could negatively affect consumption sentiments ahead of the festive season.

He advised that home loan rates will still be below 9 per cent per annum and people must use this opportunity to make their purchases by cashing in on offers and festive discounts in the market.

According to Samantak Das, chief economist and head of research, JLL India, believes that home loan interest rates inching towards 9 per cent and above may result in moderate housing sales growth in the medium term.

Since April, banks have increased interest rates on home loans by 80 basis points, a move of more than 50 per cent in the repo rate, he said.

Ramesh Nair, CEO of Colliers India said home buying sentiment is not likely to be impacted significantly.

The rate hike will only affect housing sales due to festive demand and offers by developers, according to Shiwang Suraj, Founder Director, Inframantra.