Shares of real estate majors fell sharply in Wednesday morning trade after the Reserve Bank of India RBI raised its key repo rate by 35 basis points to 6.25 per cent to curb lingering inflation pressures. As many as 8 components of the BSE Realty index traded in the red at around 11.20 am.
Oberoi Realty fell by 3.07 per cent, and the most declined was the fall of 3.07 per cent. It was followed by Brigade Enterprises down 2.25 per cent Godrej Properties down 2.15 per cent DLF down 1.76 per cent and Sobha down 1.75 per cent Macrotech Developers, Indiabulls Real Estate and Sunteck Realty, which fell somewhere between 0.35 per cent and 1.50 per cent. The BSE Realty index was down 1.46 per cent at 3636.76 at the same time.
According to Knight Frank India chairman and Managing Director, Shishir Baijal, said lending rates have risen significantly, especially for loans linked to External Benchmark based Lending Rate EBLR, where there has been a 100 per cent transmission of repo rate. During this period, loan products linked to MCLR rate are up by around 108 basis points. He said that this hike will affect EMIs and reduce home affordability. The Knight Frank Affordability Index has a cumulative deterioration of an average of 3 per cent across the country, based on the interest rate impact in this rate cycle. The shares of Prestige Estates and Phoenix Mills went up 0.97 per cent and 0.41 per cent.
Anuj Puri, Chairman, ANAROCK Group, said: "The 35 basis points rate hike by the RBI is the fifth consecutive rate hike this year. There may be repercussions on housing uptake, with repo rates now at 6.25 per cent. This hike will push up home loan interest rates, which had already crept up after four consecutive rate hikes this year. However, as long as interest rates remain in single digits mainly within 9.5 per cent, the impact on housing will be moderate. If they breach this point, we will see some real pressure on residential sales volumes in the months to come, especially in the affordable and lower mid-range housing segments.