New Delhi: The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5% for the ninth consecutive time. This decision aligns well with the government’s recent announcement on August 7 regarding indexation benefits on the sale of property. By maintaining the interest rates, home loan EMIs will remain stable, encouraging potential and current homeowners and potentially increasing home sales, particularly in the affordable segment, according to real estate experts.
“The monetary policy committee decided by a 4:2 majority to keep the policy repo rate unchanged at 6.5%. Consequently, the standing deposit facility (SDF) rate remains at 6.25%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%,” said RBI Governor Shaktikanta Das on August 8.
The RBI’s stance on maintaining the policy rate reflects concerns over persistent food inflation. Anuj Puri, Chairman of ANAROCK Group, commented, “Maintaining interest rates offers consistency in borrowing costs, prompting more aspiring homebuyers to consider taking the plunge and driving demand in the housing market.”
The recent announcement on indexation provides tax advantages for property investors by adjusting the purchase price with inflation, thereby reducing capital gains tax burdens upon property sale. This move is expected to enhance the appeal of real estate investments, increasing demand and capital flow into the housing sector.
Samantak Das, Chief Economist and Head of Research and REIS at JLL India, highlighted that the RBI’s intention is to ensure a stable interest rate environment and price stability for sustained growth. He noted, “Future rate cuts in India will primarily be influenced by domestic factors. With food inflation still sporadic, the RBI remains committed to sustaining inflation alignment with their targets.”
The sentiment is likely to strengthen over the upcoming festive season, with stability in interest rates and the recent announcement to rationalize stamp duty charges and provide concessions for women homebuyers. Vimal Nadar, Senior Director and Head of Research at Colliers India, emphasized that visibility in financing charges should benefit homebuyers and developers alike during the festive season.
The RBI also underscored the importance of robust banking credit systems with stringent credit appraisal processes and risk management for retail loans, especially top-up and gold loans. G Hari Babu, National President of NAREDCO, stated that the RBI’s decision to keep the repo rate at 6.5% and maintain the GDP growth forecast at 7.2% for FY25 creates a stable environment for the real estate sector.
Aman Sarin, Director and CEO of Anant Raj Limited, welcomed the RBI’s decision, stating that stable interest rates are particularly beneficial for the real estate sector, allowing home buyers to plan their purchases without the uncertainty of potential rate hikes.
Pradeep Aggarwal, Founder and Chairman of Signature Global (India) Ltd., noted that the RBI’s decision to keep rates unchanged is expected to keep inflation in check while potentially lowering interest rates in the future, further propelling real estate sales momentum and providing opportunities for prospective homebuyers.
