RBI’s Steady Repo Rate: A Boost For Indian Realty Sector 

The Reserve Bank of India’s decision to keep the repo rate unchanged is a boon for the Indian real estate sector. This stability ensures that home loan interest rates remain low, making housing more affordable for potential buyers. With unchanged borrowing costs, both developers and homebuyers benefit from increased market confidence and predictability.

The mid-range and premium property segments together account for more than 55% of the current supply. In Q1 2024, they recorded approximately 76,555 units sold, nearly 60% of the total sales. Buyers in these segments are sensitive to volatile interest rates. Upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments.

The affordable housing sector is the most cost-sensitive. While PMAY Urban has sanctioned 118.64 lakh homes against a demand of 112.24 lakh homes, affordable housing (homes priced under INR 40 lakhs) sales in Q1 2024 recorded 26,545 units, a mere 20% of the total sales. However, unchanged home loan rates alone are insufficient to induce new vibrancy in the affordable segment. It is hoped that the government will soon introduce further incentives to support it.

With the mandate of a stable government now manifest in an unchanged monetary policy, the housing sector’s overall growth momentum will continue. Stability in repo rates not only benefits developers and buyers but also fosters a predictable market environment. This predictability is crucial for sustained growth in the Indian real estate sector.