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The Reserve Bank of India's (RBI) decision to keep the repo rate unchanged at 6.5% is positive news for the real estate market, particularly for homebuyers. This move ensures that home loan interest rates will remain stable for now.
Industry experts believe this decision will maintain the momentum in home purchases witnessed in recent quarters. Anuj Puri, Chairman of ANAROCK Group, highlighted that housing sales across major cities like Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata, and Pune have been phenomenal in the last few quarters, with total sales of over 1.30 lakh units in Q1 2024, the highest quarterly sales in the last decade. The unchanged repo rate will give aspiring homebuyers confidence to proceed with their purchases, especially considering the significant jump in average residential prices across these cities - ranging between 10 percent and 32 percent in Q1 2024 when compared to Q1 2023.
The stable interest rates are expected to benefit the affordable and mid-segment housing market the most. Mr. Prashant Sharma, President of NAREDCO Maharashtra, predicts an increase in demand in these segments, potentially leading to a rise in overall sales.
Experts see the RBI's decision as a sign of continued growth in the real estate sector. Vimal Nadar of Colliers India believes this reinforces investor confidence and provides a solid foundation for future investment and development. This stability, alongside the projected GDP growth rate of 7% for FY2025, allows developers to explore new opportunities and drive innovation in the market.
While many in the real estate industry are hopeful, some experts advise caution. Pritam Chivukula, Vice President of CREDAI-MCHI, stresses the need for a balanced approach. This means considering both global economic trends and domestic fiscal policies. The sector's long-term health relies on broader economic stability and consumer confidence, as well as factors like inflation, which the RBI is working to control.
The RBI's decision to keep the repo rate at 6.5% is good news for the real estate market, especially for homebuyers. Stable interest rates and a sense of security are likely to support ongoing growth in the sector. However, it's important to stay updated on global and domestic economic factors. For instance, if inflation decreases, there might be rate cuts in the latter part of 2024. Being aware of such changes is essential for long-term success.
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