SME Futures Editorial
The Reserve Bank of India (RBI) announced its fifth bi-monthly monetary policy for FY25 on December 6, 2024. The Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, decided to keep the repo rate unchanged at 6.5 per cent for the eleventh consecutive meeting. This decision reflects the central bank’s cautious approach amidst persistent inflation and global economic uncertainties.
While the unchanged repo rate ensures stability in borrowing costs for developers and homebuyers, it also means continued high EMIs for existing home loan borrowers, dampening affordability and demand. However, industry leaders remain optimistic about the sector’s prospects, citing supportive government initiatives and steady urbanisation.
Industry Reactions
Shishir Baijal, Chairman and Managing Director, Knight Frank India
“As anticipated, the RBI has maintained its pause on interest rates. While the growth deceleration isn’t alarming yet, a rate cut would have been beneficial for homebuyers facing high borrowing costs. Affordable housing, in particular, has seen a slowdown due to reduced consumption among lower-income groups.”
Prashant Sharma, President, NAREDCO Maharashtra
“The RBI’s decision reflects a measured approach to balancing inflation and growth. Stability in interest rates will maintain buyer sentiment, especially in affordable and mid-segment housing. However, further tax benefits and incentives are needed to boost housing demand.”
Kuldeep Jain, Founder & CEO, Build Capital
“A stable repo rate ensures steady home loan costs, sustaining momentum across residential and commercial real estate. Long-term measures to enhance liquidity and credit flow would further benefit the sector.”
Vikas Sutaria, Founder, Iraah Lifespaces
“The decision to keep rates unchanged is encouraging for the luxury and holiday home markets, where buyer confidence is critical. Infrastructure development and supportive policies should now be the focus to sustain demand.”
Ashish Agarwal, Co-Founder, Enzyme Office Spaces
“The RBI’s neutral stance acknowledges the peculiarities of the real estate market. With stable construction costs and interest rates, developers can focus on project execution, evidenced by a 22% improvement in project completion rates.”
Anil Mutha, Co-Founder, Nandivardhan Group
“A neutral stance supports steady growth in home loans and project funding. However, a 25 bps rate cut could have further stimulated real estate growth.”
Shraddha Kedia-Agarwal, Director, Transcon Developers
“The policy’s stability benefits metro cities with rising housing demand, particularly in luxury housing. Developers can plan innovative projects without the pressure of fluctuating rates. Incentives for urban infrastructure development would be welcome.”
Rohan Khatau, Director, CCI Projects
“The neutral stance ensures market predictability, which sustains homebuyer confidence. Policies addressing liquidity challenges and faster project approvals are needed to complement this stability.”
Samyak Jain, Director, Siddha Group
“This decision will enhance economic stability and encourage homeownership. Favorable borrowing conditions make this an opportune time for first-time buyers to invest in long-term assets like homes.”
Govind Krishnan Muthukumar, MD & Co-Founder, Tridhaatu Realty
“Stable borrowing costs align with the sector’s goals of catering to sustainable and climate-resilient housing demand. This policy fosters investor and homebuyer confidence.”
Vedanshu Kedia, Director, Prescon Group
“The RBI’s balanced approach supports liquidity and long-term projects, especially in the premium housing segment. Collaboration between policymakers and banks can further strengthen this trajectory.”
Abhishek Jain, COO, Satellite Developers Private Limited (SDPL)
“This prudent move balances inflation control and economic growth, putting more money in consumers’ hands. It is expected to boost demand and encourage homeownership.”
The RBI’s decision, while neutral, underscores the need for additional policy support and incentives to sustain growth in India’s real estate sector. Stability in interest rates provides a foundation, but the industry looks forward to measures that could further stimulate demand and investment.
