More expensive home loans can affect home sales; builders expect minimal impact on festive demand


Home sales are likely to be hit as home loans become more expensive after the RBI’s latest repo rate hike, but builders are hoping pent-up, festive demand will negate any major impact on buying sentiment.

The interest rate on home loans is currently around 8% and is expected to approach 9% after the 50 basis point hike in the repo rate announced by the RBI on Friday. This will reduce the affordability of buying homes.

However, property developers and consultants believe the impact will be “minimal” and not significant as the concept of home ownership has gained momentum during the COVID-19 pandemic.

In addition, manufacturers are betting on a festive demand for navigation. Promoters are already offering price discounts and freebies to boost sales during festival season and could further sweeten deals to entice fence-keepers, they said, and advised potential buyers to take advantage of the deals . “We expect that the rise in the repo rate will not significantly affect positive consumer sentiment. The developers are also offering several festive offers that will contribute to overall demand,” said the chairman of the apex body. CREDAI real estate agents, Harsh Vardhan Patodia, in a statement.

Naredco Vice Chairman Niranjan Hiranandani said any further rise in interest rates, compounded by commodity inflation, would act as a drag on the market. He said the government should make fiscal interventions to control inflation.

Home sales rose 40-50% in the July-September quarter, despite rising interest rates on home loans and rising house prices, according to data released by Anarock and PropTiger. Anuj Puri, chairman of housing brokerage Anarock, said: “With this rise in repo rates, home lending will soon increase. This may impact residential sales to some extent in the next quarter. festive, especially in the affordable and midscale housing segments”.

However, Pradeep Aggarwal, Founder and Chairman of Signature Global, which is dedicated to affordable housing, said: “We are very optimistic that sales data would increase by around 20-30% in this quarter and over an annual basis as well.”

Reacting to the RBI’s monetary policy, major property players said there would be a “minimal” and “moderate” impact on house sales. All are betting on strong commercial momentum since last July and on current festive demand.

Sanjay Dutt, MD and CEO of Tata Realty & Infrastructure Ltd, said real estate could be more expensive by the end of this year due to a persistent rise in the repo rate.

“However, given the current festive fervor, we expect market sentiment to remain robust with continued demand in the real estate sector,” he added.

Venkatesh Gopalkrishnan, CEO of Shapoorji Pallonji Real Estate, said the move could impact the mortgage lending category, which could influence the buying sentiments of affordable to mid-range home buyers.

“Although we are not witnessing a big uptrend given the current scenario, we have seen good business lately which is likely to continue,” he said.

Gopalkrishnan said the current holiday season should bring positive movement as home ownership remains important for buyers, which will eventually drive sales, especially in the luxury and premium categories.

“We expect marginal changes to have minimal impact on buying decisions.” M Murali, CMD, Shriram Properties Ltd said.

Manoj Gaur, CMD of Noida-based Gaurs Group, also believes that the move would have a marginal impact on the real estate sector.

The RBI’s decision could impact homebuyer sentiment, which could lead to slower sales in the property sector, said Reeza Sebastian Karimpanal, President, Residential, Embassy Group.

However, she said the impact would be short-term as owning a home remains top of mind for most buyers.

Home loan interest rates could rise now, causing near-term turbulence in overall housing demand, said Ramani Sastri, chairman and chief executive of Sterling Developers Pvt Ltd.

Atul Goyal, chief financial officer of the Bengaluru-based Brigade Group, expects “minimal impact” on the property sector and said the increase in interest rates for business loans would be marginal.

“Home loans are typically tied to floating interest rates with longer tenors. In most cases, EMIs will stay the same with the loan term adjusted. The economy remains strong and we expect that positive buyer sentiment.

“We are currently seeing a steady demand for real estate, and we expect the current momentum to continue with increased hiring and salary increases in the IT and ITS sectors,” he added. .

Anup Agarwal, chief financial officer of Gurugram-based AIPL, said India’s economy is in a much better position than many other countries and therefore demand is expected to remain intact despite rising rates.


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