After a cut in GST rates for real estate, the repo rate cut of 25 basis points is a big boost to the sector, experts said.
“The real estate sector has been looking forward to such stimuli to boost sales velocity,” Shishir Baijal, Chairman & Managing Director, Knight Frank India told Moneycontrol.
The Reserve Bank of India has also formed a committee to assess the state of housing finance securitisation markets and proposed measures to develop the same. The committee will submit the report by August 10.
“The focus to align the Indian housing finance securitisation market as well as the secondary market for corporate loans with international best practices as announced on April 4 will essentially deepen these markets and ensure better price discovery,” Khushru Jijina, MD, Piramal Capital and Housing Finance said.
Experts take:
Parth Mehta, Managing Director, Paradigm Realty
The Monetary Policy Committee (MPC) statement of having a 25bps cut is something the industry was expecting and was needed in order to boost liquidity and investment cycles as few data points like IIP and car sales numbers that came out recently have been timid.
One of the major reasons RBI could give a go-ahead to the cut was because the Inflation was in check giving them headroom to accommodate cut. This rate cut shall help the borrowing rates for builders and home loan rates. Along with already lowered GST, it will be a sentiment booster.
We also believe that if the inflation continues to be stable then we can expect another rate cut in the next MPC meeting to revive consumer spending and restore economic growth.
Khushru Jijina, MD, Piramal Capital and Housing Finance
It is necessary to resurrect India’s consumer demand and economic growth before a synchronous downturn in advanced economies heighten market volatility.
The rate cut and moderation in liquidity coverage ratio coupled with recent instances of liquidity injections indicate that RBI is cognizant of these risks. These measures would certainly help ease liquidity and improve access to cheaper credit by India Inc. as well as retail consumers.
The focus to align the Indian housing finance securitisation market and secondary market for corporate loans with international best practices as announced, will essentially deepen these markets and ensure better price discovery. We look forward to the detailed notes on RBI’s decision to allow non-deposit taking NBFCs to apply for authorised dealer licenses which is expected to expand the forex market.
Shishir Baijal, Chairman & Managing Director, Knight Frank India
We are delighted with the second consecutive rate cut that ushers an era of falling interest rate regime. We hope that the reduction in rate is passed on by the banks to the home buyers.
Lower interest rates, along with the recent reduction in GST rates for under construction properties, should provide the fillip to end-user demand. The real estate sector has been looking forward to such stimuli to boost sales velocity.
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