Real estate to get a boost with RBI rate cut
New Delhi- Reserve Bank of India (RBI) has announced reduction in short-term lending rate by 0.25 percent to 7.75 per cent. This move is expected to lead to reduction in interest rates for buyers and builders.
RBI has also cut Cash Reserve Ratio (CRR) to 4 percent, releasing Rs 18,000 crore primary liquidity into the system.
Realty experts see it as a positive step in increasing housing demand and encourage foreign direct investments (FDIs) in the sector. The much awaited 25 basis points cut in repo rate and an equal cut in cash reserve ratio by the RBI is expected to bring cheer to declining real estate market. RBI’s move is a small but necessary move towards the development of real estate in India. Such growth-oriented plans combined with the government’s fiscal measures are necessary for the industry development.
In April 2012, the repo rate had been cut by 50 basis points. Experts are of the opinion that more rate cuts would be triggered in the future which would allow cash crunched developers and other sectors to borrow at competitive rates. The consumers will be highly benefited due to the reduction in home loan interest rates and demand for housing is likely to rise. Affordable prices for houses would result in a better revival of the industry, said market analysts.
Some developers are of the opinion that along with repo rate cuts, there is much more to be done to support buyers and builders. Measures for strengthening fund supply to curb inflation and key initiatives and boosters like according the status of infrastructure for housing are necessary for the industry’s all round development.
Bankers said that the RBI’s rate cut would be the beginning of monetary easing. Although it is a small initiative, it may be a good start of a series of rate corrections.
According to Jones Lang LaSalle (JLL) India, a global real estate consultancy firm, the RBI has shown commitment to stir in more liquidity in the real estate sector by reducing the policy rates. The policy is a boost to real estate market sentiment and sending out positive signals to global investors.
Though the developers apex body, Confederation of Real Estate Developers Associations of India (CREDAI), hailed the decision, it expressed that the repo rate cut by 25 basis points is not enough.
According to National Real Estate Development Council (NAREDCO) infusion of additional funds will boost businesses for real estate and around 300 allied sectors. It hopes that the monetary and fiscal policies of 2013 would be promising for builders as well as buyers.
The central bank being keen on controlling inflationary pressures has led to stringent moves from the RBI over the past nine months, said Cushman & Wakefield (C&W). The realty consultant said that financial institutions are expected to offer better rate of interest on loans and several new infrastructure and development projects would be coming up.
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Cash Reserve Ratio, Confederation of Real Estate Developers' Associations of India, Cushman & Wakefield, Foreign direct investments, housing demand, Jones Lang LaSalle (JLL) India, monetary and fiscal policies of 2013, National Real Estate Development Council, Real Estate Sector, Repo Rate, repo rate cut, Reserve Bank of India, short-term lending rate
[...] RBI had made this norm as it had past experiences with the brokers which was not satisfactory. Thus, they came up with the regulations to ensure that any group undertaking such activities on a significant scale is not considered for a bank licence. [...]
[...] Real estate to get a boost with RBI rate cut [...]
[...] Real estate to get a boost with RBI rate cut [...]
[...] Real estate to get a boost with RBI rate cut [...]