What Effect Will The Recently Announced Increase in The Repo Rate Have on The Indian Real Estate Market?

A number of Indian real estate industry professionals have lately remarked on the repo rate rise and its potential influence on the Indian real estate market as a whole and in specific regions.

Please see their comments below:

Continuous rate increases may cause short-term volatility in the entire housing market when buyers are hopeful about purchasing a property, and this may increase purchasers' total acquisition costs. The real estate industry has begun a steady rebound in major property markets, driven mostly by end-users; nonetheless, recurrent rate increases may have an effect on the interest rate-sensitive sector. In recent years, the resurgence in real estate demand has been largely attributable to historically low interest rates; consequently, a rate hike would pose an obstacle to affordability. However, there is optimism, since the affordability and discretionary incomes of modern purchasers are far higher than in the past. We remain optimistic despite the odds since there is tremendous pent-up demand from a huge population base and first-time homebuyers. Real estate is unquestionably one of the strongest investment vehicles, and we expect markets to have continuous growth over the next several years.

Mr. Ramani Sastri, Chairman and Managing Director of Sterling Developers

A shift in lifestyle is fuelling demand for luxury real estate. We do not expect the recent rise in repo rates to have a big effect on the luxury property market, given the demand from homebuyers in this category is independent of these factors. Despite a moderate increase in loan rates, the affordability of the home loan remains excellent. We expect that the good attitude will persist in the luxury market as a result of post-pandemic adjustments in purchasing behaviour. Nonetheless, a fall in the key rates in the future would be greatly welcomed, since low interest rates have been a significant role in the restoration of general real estate demand and the strengthening of the sector's important liquidity condition.

Mr. Lincoln Bennet Rodrigues, Chairman and Founder of The Bennet and Bernard Company, is well-known for his Goa-themed luxury homes.