Steady Repo Rate by RBI Will Help Mumbai Housing Market Grow Further in 2024

Stability in Repo Rate Boosts Indian Housing Market Growth

In Mumbai, the Reserve Bank of India's continuous maintenance of the repo rate at 6.5% for the fifth time in a row is anticipated to bolster the housing property market. This steadfast approach is likely to maintain a consistent growth trajectory in home sales. The ongoing momentum in mid-income and premium housing sales is expected to continue, while the affordable and low-income housing sector might see more cautious activity due to sensitivity towards interest rates.

Impact of Past Rate Increases and Current Home Loan Rates

The central bank had previously increased policy rates through six successive hikes since May 2022, cumulatively raising the rate by 250 basis points to 6.5%. This pause in April has seen home loan rates stabilize around 9%, a significant rise from the record low of 6.6% a year ago.

Real Estate Markets to Gain from Stable Rates

Niranjan Hiranandani, the national chairman of Naredco, suggested that both residential and commercial real estate markets could benefit from these stable interest rates. He emphasized that maintaining low borrowing costs could make purchasing properties more affordable for individuals and businesses.

Mixed Reactions in the Real Estate Industry

The real estate sector has generally welcomed the RBI's decision to maintain stable interest rates. However, some experts believe that a reduction in rates could have further spurred housing sales. Boman Irani, president of Credai National, mentioned that given the controlled inflation, robust economic growth, favorable monsoon conditions, and the RBI's position, a rate cut would have been an ideal catalyst for enhancing housing momentum and consumer spending. This would have positively impacted not only real estate but other sectors as well.

Liquidity to Foster Construction and Confidence

Experts anticipate that sustained liquidity in the economy will lead to increased construction activity and new launches in key real estate markets. This stability is expected to boost confidence among homebuyers by ensuring predictability in loan repayments and reducing the risk of sudden increases in borrowing costs. Developers, too, are likely to benefit from the steady cost of capital, avoiding escalation in financial obligations.

Residential Market Trends in Major Indian Cities

The residential market in major Indian cities has been on an upward trend, reaching a six-year high. In a notable shift, sales in the mid and high-end segments have surpassed those in the affordable housing sector for the first time.