New Delhi, February 7
In a move that is expected to boost residential real estate, business investments, and overall economic growth, experts have welcomed RBI's repo rate cut, combined with budgetary measures for real estate and investments -- a game changer for economic growth.
According to Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL, the RBI's decision aligns monetary policy with fiscal strategies to reignite consumption. He emphasised that easing the cost of capital would inject momentum into spending and investment.
He said, "The rate cut - the first in nearly 5 years - sends a clear signal that a cohesive policy framework is in play, prioritising growth while keeping an eye on risks. For the real estate sector, the implications are profound and far-reaching. We anticipate this rate cut to be a catalyst, igniting homebuyer sentiment, enhancing affordability, and potentially unleashing a new wave of demand in the housing market."
"While 2024 was the best year ever in terms of sales and market activity, rising prices were beginning to have a lagging effect on market momentum, as evidenced by a decline in Q4 2024 sales numbers. The rate cut, coupled with budget tax benefits favouring mid-income buyers, will provide additional support to homebuyers and help sustain market buoyancy," he added.
Dr. Niranjan Hiranandani, Chairman, NAREDCO, described the repo rate cut as a long-awaited and strategic move, citing stable inflation, a moderate fiscal deficit, and steady economic growth.
He said, "As inflation is now under control, the fiscal deficit remains moderate, and economic growth is expected to accelerate steadily, the reduction in the repo rate signals a renewed sense of resilience. Additionally, it assures us that despite external geopolitical uncertainties, our domestic economic climate keeps markets efficient and demand robust."
He added, "Combined with the tax benefits announced in the FY26 budget for the middle class, this policy change will boost sales velocity. Thus, lowered interest rates will further nudge homebuyers to buy an ownership home with an upgraded lifestyle."
Shishir Baijal, Chairman and Managing Director, Knight Frank India, welcomed the decision and lauded new RBI Governor Sanjay Malhotra for his first monetary policy announcement.
He said, "For the real estate market, lower borrowing costs are expected to boost demand for home loans, making housing more affordable and stimulating sector growth. This is a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches."
He further said, "We hope interest rate cuts will be passed on to consumers and the home loan rates become more attractive which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below Rs 50 Lakh category, which has seen continued weakening of demand.
"This rate cut, the first one since May 2020, is likely to support slowing economic growth by boosting consumption and investment. Increased liquidity in the banking system will help address market constraints, benefiting sectors like infrastructure and housing," he added.
Experts believe that the repo rate cut, combined with tax benefits announced in the FY26 budget for the middle class, will provide additional support to homebuyers and help sustain market buoyancy. The move is expected to boost sales velocity, lower interest rates, and nudge homebuyers to buy ownership homes with an upgraded lifestyle.
Overall, the repo rate cut is seen as a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches.
- ANI