Will RBI’s Rate Cut Revive Real Estate Sector?

Real estate is one such industry that faces huge ups and downs over a period of time. In recent months, this industry has taken blow due to a liquidity crisis. Government and RBI are taking various measures to help the real-estate industry to get stronger in the market. In a recent development, the real-estate industry has welcomed the RBI’s decision to cut down the repo rates. The government has already offered sops to the real estate sector in the interim budget.

Governor of RBI, Shaktikanta Das reduced the repo rate to 6.25%, which gave a significant relief to the real estate sector, which is suffering from liquidity crunch due to the IL&FS disaster.

Chairman and managing director of Knight Frank, Shishir Baijal said that this move by RBI would make it possible for the banks to offer loans to the end customers with revised (reduced) interest rates, thereby making it possible for more people to purchase homes.

Niranjan Hiranandani, president of National Real Estate Development Council said that RBI’s decision to reduce repo rates will boost the liquidity and investment, thereby facilitating a positive economic growth.
What made many people stay away from buying a home are the higher increase rates and higher EMIs. With the reduced repo rates, banks can cut down the home loan interest rates and EMI’s, so more people will come forward to make purchase decisions.

In recent years, real estate companies faced severe losses as there fewer people to buy homes. Many completed homes and apartments were unoccupied for days and months and even years, due to the sluggish economy. However, this phase is expected to end with the RBI’s decision. More real-estate projects are expected to launch soon and experts believe that the real-estate sector will gain back the momentum.

According to Anushman Magazine, CEO and Chairman of CBRE, RIB’s repo rate cut will boost the investment decision and positively impact the customers’ sentiments. He said the recent budget sops will fuel the demand.

Another group of experts doubted whether the banks will pass the benefits of the repo rate cut to the customers. These experts opine that the economy is very tight and this will prevent the banks from passing on all the benefits to home loan customers.

Though the move from RBI was unexpected, experts feel that it was a long overdue, after the first rate that happened some years ago.

Real-estate is a sector, which almost thrives in almost all the developer and developing countries. Buying a home or property is a lifetime dream for the people and it is a decision that involves lots of sentiments. There are many factors that contribute to the growth and downfall of the real estate sectors. Good cash flow is one of the biggest factors that decide the fate of the real-estate sector.

Due to the recession and economic breakdown, there was a liquidity crisis among the people, which negatively affected the real estate industry. Increasing loan interest rates is also one major reason that prevented people from getting home loans.

Experts and prospective home buyers believe that RBI’s rate cut will help the real estate sector in a big way.

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