The real estate industry on Wednesday welcomed the Reserve Bank of India (RBI) decision to keep the repo rate unchanged saying it was a relief as there had been worries that a possible rate hike could adversely affect the market.
The central bank has maintained a status quo on the repo rate, keeping it unchanged at 6.5%. The RBI had hiked the repo rate, at which it lends to other banks, twice in a row - in June and August - but decided to keep it unchanged in the previous policy review in October.
On Wednesday, with all the six members of the monetary policy committee (MPC) voting for a hold on rates, the RBI kept benchmark repurchase (repo) rate at 6.5%.
In a statement after the decision by the RBI, Shishir Baijal, Chairman & Managing Director of Knight Frank India, said, "The decision on keeping the key policy rates unchanged is on expected lines and will be a relief for the real estate industry that has been worried over a possible rate hike adversely impacting the market."
"Since the last Monetary Policy Committee Meeting, there has been a big relief with the fall in crude prices and the strengthening of the Rupee, thus, reducing inflationary risk," he said.
"We believe the easing inflation situation and the need to actively support growth are the primary consideration for the MPC to maintain a status quo on rates," Mr Baijal added.
Ankur Dhawan, Chief Investment Officer at PropTiger.com, expressed similar sentiments.
“Increase in repo rate at this point of time would have been a very bad news for real estate industry which is already going through fund constraints due to NBFC liquidity issue. In fact industry was hoping if rates could have been reduced in this MPC meeting to revive the industry. No change in repo rate is a slightly negative news for the industry,” Mr Dhawan said.
Farshid Cooper, Spenta Corporation's Managing Director said the RBI's decision will keep the approach steady for potential home buyers to invest.
"With this regulatory regime for the real estate sector, we expect that the unchanged repo rate of 6.50% will keep the approach steady for potential home buyers to invest. A rate cut at this stage would have helped in lowering the home loan interest rates. It could have made the home buying a reality for most buyers who have been eagerly waiting for the rates to cut down. We hope RBI to take measures in the near future to ensure the stability is maintained in the real estate market," Mr Cooper said in a statement.
Meanwhile, India Inc said the RBI's decision was on expected lines even as it sought more measures by the apex bank to improve the credit flow to the economy.
"There is an urgent need to improve the credit flow to the real economy. GDP growth is already showing signs of slowing down. With crude oil prices down, we need to take further measures for the revival of animal spirits in the economy and give more momentum to it," Rashesh Shah, president of FICCI, said.
Industry body Assocham said the RBI's decision was on expected lines in the backdrop of rupee appreciation, softening of oil prices and benign food inflation.
