Anuj Puri, Chairman – ANAROCK Group
The Reserve Bank of India’s decision to keep the repo rate unchanged is a boon for the Indian real estate sector. This stability ensures that home loan interest rates remain low, making housing more affordable for potential buyers. With unchanged borrowing costs, both developers and homebuyers benefit from increased market confidence and predictability.
The mid-range and premium property segments together account for more than 55% of the current supply. Together, they recorded approx. 76,555 units sold in Q1 2024 – nearly 60% of the total sales. The buyers of this segment are sensitive to volatile interest rates, and upward hikes would cause many of them to defer home purchases. This policy continuity supports sustained demand in these two segments.
The affordable housing sector is, of course, most cost sensitive. While PMAY Urban has sanctioned 118.64 lakh homes against a demand of 112.24 lakh homes, affordable housing (homes priced under INR 40 lakhs) sales in Q1 2024 recorded 26,545 units – a mere 20% of the total sales. However, as we have seen, unchanged home loan rates alone are insufficient to induce new vibrancy in the affordable segment. It is hoped that the government will soon introduce further incentives to support it.
With the mandate of a stable government now manifest in an unchanged monetary policy, the housing sector’s overall growth momentum will continue.