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RBI rate cut will boost housing demand: Realty developers

  •   Thu, Jan 15 2015 02:55:58 PM

New Delhi, Jan 15, (PTI) :  The real estate industry today hailed the RBI's decision to cut key interest rate, saying the move will boost housing demand and also improve sentiments in the sluggish property market.

However, real estate developers and property consultants demanded that interest rates be further reduced.

Encouraged by softening inflation, the RBI today decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.

"It's a great new year gift. It seems that the Finance Minister's effort has borne fruit to convince RBI governor. Given the background of RBI governor, even the small beginning will be marked as big signs of hopes for the Indian economy," DLF group executive director Rajeev Talwar told PTI.

The move would definitely encourage buyers now to invest in new homes, he added.
Commenting on the development, property consultant CBRE South Asia Chairman & MD Anshuman Magazine said: "This decision, early in the year, is a welcome one. Given the current market situation, this reduction in the base rate is an important step in improving home buying sentiments".

Magazine said that this move, hopefully with expected reduction in mortgage rates, would improve residential sales across the country, which have been suffering from general slackness in recent times.

Housing sales fell to 1.75 lakh units in the primary markets of seven major cities in 2014 against nearly 2 lakh units in the previous year due to demand slowdown, according to recent JLL India report.

CREDAI, the apex realtors' body, Chairman Lalit Kumar Jain termed RBI's decision as a "good beginning" but said "this is not enough."

"A reduction of 200 basis point (reduction of interest rate by 2%) within short span is needed," Jain said.

Echoing similar views, Credai President (Elect) Getamber Anand said: "Good small step, but industry is awaiting a more aggressive cut this quarter".

Global property consultant JLL India Chairman & Country Head Anuj Puri said: "I expect this cut in interest rate to be the first of several to come, and these will cumulatively make a big difference to home loan borrowers. As of now, the current rate cut will help revive market sentiment, which is very timely".

Cushman & Wakefield Executive Managing Director, South Asia, Sanjay Dutt said this move would instill hope and confidence in the real estate industry that a recovery in housing sales is around the corner.

SARE Homes MD David walker said the measure will cheer up the markets and hoped that financial institutions would pass on this reduction to customers, which in turn would boost housing demand.
  

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Comment on this article

  • Vincent Rodrigues, Frazer Town,B'lore 560005

    Fri, Jan 16 2015

    This is a good step initiated from the RBI Governor and hope he will take more positive steps in future to boost the growth of Indian industries.

    DisAgree Agree [1] Reply Report Abuse

  • ss, mangalore

    Thu, Jan 15 2015

    Can it be termed as Modi is getting the reward for mr. man Mohan Singhs Policy.. will it be like that Mr. Singh set the stage right for Modi.

    DisAgree [2] Agree [5] Reply Report Abuse

  • A.S.Mathew, U.S.A.

    Thu, Jan 15 2015

    The real estate price in India is very highly inflated and it is an absolute must that the real estate price like the oil price has to be reasonably priced.

    The European countries and the U.S. along with some other countries adopted the policy of "interest reduction" to stimulate the economy based on the books of Economics, but the European economy was in a stagnation for long. Now, they are planing to print money to create more circulation of money to stimulate the economy and to put the economy into a moderate mode of inflation. How it will work?

    Even with the very low interest rate in the U.S., the real estate sales are down. Declined income and personal liquidity crunch has curtailed the spending habit very considerably.

    The Christmas sales of December was less than 0.9% of November sales.

    The gas sales was 6.5% less than the November sales. Even through the gas price is surprisingly low, the gas stations are vacant and few cars are seen in the road. So, as blindly anticipated, the in the oil price is not doing any boosting of the U.S. economy as yet because the money saved at the gas stations are used to pay the basic bills.

    Personal income of the middle class is like the income 25 years back, and the lavish spending nature through credit driven by a spirit of " let us enjoy today and we may die tomorrow" is the thing of the past so the highly cautious mindset will not motive the customers anymore in reckless and impulsive spending.

    In India, if the human psychology is different, the turn of events may be different.

    DisAgree Agree [4] Reply Report Abuse

  • RAVINDRA, KARKALA

    Thu, Jan 15 2015

    FINAL SALVO FROM NDA GOVT FOR GROWTH OF INDIAN ECONOMY. MARKETS HAVE REACTED POSITIVELY TODAY BY INCREASE OF BSE INDEX BY 728.73 POINTS.

    DisAgree [1] Agree [7] Reply Report Abuse

  • Samson Rebello, Kallianpur/Dubai

    Thu, Jan 15 2015

    Its time for NRI depositors to keep the FD for maximum period. The interest rate on deposits also will come down in near future. Hope it will not go down as 2 to 3% asit was couple of years back.

    DisAgree [1] Agree [4] Reply Report Abuse

  • Anees, Karkala

    Thu, Jan 15 2015

    Lets wait for 6 more month..world economy slowdown due to reduce of crude oil price.Sure they further reduce RBI rate cut for control the Rupee value against Dollar.

    DisAgree [3] Agree [3] Reply Report Abuse

  • sunill, bengaluru

    Thu, Jan 15 2015

    crude oil price has reached $45/barrel today.some sources tell it will go to $20/barrel untill end of this year.then it will again zoom to $70-80 and by later half of 2016 back to $120-130/barrel.

    the fall in price of crude oil is a well controlled intentional fall by usa/sunni countries to tank the economies of iran and russia and therby bring them to thier knees.

    what they want is iran should be in such dire states that it cannot afford to be nuke power and
    russia should abandon its plan to capture ukraine and ukraine should join europe so that ukraine(shares huge border with russia) will be a strategic land for usa/nato allies if world war 3 broke out in future stages between usa/nato and russia/china.

    so modi is alucky man.he will take advantage of this due to reduced inflation and interest rates and will therby will win big states like up,bihar,bengal,assam and karnataka in the meantime bcoz of acche din.lolz

    DisAgree [3] Agree [13] Reply Report Abuse

  • Aubb, Kuwait

    Thu, Jan 15 2015

    @ Sunil,

    Most of what you said is appropriate to the situation,

    as far as Modi is concerned,
    he will face defeating days if he goes the way of RSS, BJP, VHP what have you.

    DisAgree [8] Agree [12] Reply Report Abuse

  • sunill, bengaluru

    Thu, Jan 15 2015

    mr aubb,

    there is nothing modi will do to disturb the communal harmony.you will get to know this once his term completes and in next time muslims by thier own will vote for him.wait for 5 years to see the changes.

    DisAgree [5] Agree [9] Report Abuse

  • Valerian D'souza, Udupi / Mumbai

    Thu, Jan 15 2015

    Other reasons for fall of crude is is: United States and Canada
    started exploring alternatives such as Shale gas.
    It is a natural gas found in shale formations.
    A type of rock in the earth's crust.
    It is being considered as the new source of natural gas.
    India is expected to have around 6 trillion cubic metres (tcm) of recoverable shale gas (compared to 1.3tcm of conventional natural gas)
    However production cost will be significantly high due to the advanced technological requirements and relatively unknown terrain.

    DisAgree Agree [6] Reply Report Abuse

  • sunill, bengaluru

    Thu, Jan 15 2015

    india too has huge shale reserves,onece extraction is materliased which will happen in not more than 5 years.$300 billion oil/year which india spends will be saved.soon india will be third richest country right behind usa and china.usa dont want that.thats is the reason it isa asking india to sign climate agreement and numerous ngo's are in india with foreign funding to stop coal mining and shale exploration.

    modi is too shrewd to not know this.he has recently stopped a ngo troll from going to usa to give a speech on coal mining by offloading her and sealing her passport as offloaded.

    under modi india will take giant strides in devolopment and its standing in international arena.i am not supporting bjp or congress but modi ony bcoz he is visionary leader.i will not say the same to advani/rajnath/sushma/jaitley or congress as they are all gasonly packaging and no content.

    DisAgree Agree [5] Report Abuse

  • Valerian D'souza, Udupi / Mumbai

    Thu, Jan 15 2015

    Interest rate cut should benefit house buyers. Buyers benefit should result into builders benefit.
    Apart from interest rate cut, Govt should prescribe proper disclosure norms to the builder at the site itself.
    Builder should be made to exhibit upto date facts on the project. Title of the land, encumbrances if any, Municipal approved plan, present stage of progress, grade allotted to builder, committed date of completion if any at the site itself.
    How else buyer can refrain from buying or investment decision?
    Govt is taking taxes from buyers, they are also party if the builder commits irregularities and Govt failed in its attempt to save innocent buyers.
    There are ISI marks to industrial products, AGMARK to agricultural produce, why not to BIG BUILDERS?

    DisAgree [1] Agree [20] Reply Report Abuse

  • Santan Mascarenhas, Kinnigoli/Mumbai

    Thu, Jan 15 2015

    This 25 basis point reduction in repo rate may not bring down EMI considerably since there is no much scope for Home Loan interest rate to come to the desired level. But, as told by Mr. Jain 2% reduction will make real impact.
    For Rs 20 lakh loan at these rates for 20 years, EMI works out like this:
    10.5% 19968
    10.25% 19633 less by Rs 335 only.
    8.5% 17356 less by Rs 2612.
    As housing prices are very high now, this measure may not give a boost, but, the beginning is made.

    DisAgree [1] Agree [11] Reply Report Abuse

  • vellano1, Mumbai

    Thu, Jan 15 2015

    And finally this man REALISED! he was sitting on stubborn on this decision! this is very very small - however a BIG STEP!.. I would foresee, further rate cuts, since he believes govt has contained inflation!..

    However, if he really wants to boost investments, he need to cut rates further down, to make capital cheaper!

    Vjapayees term saw huge investmnet in low cost housing, infra, steel/cement industry- everybody dreamt of owning a house, because rates were so cheap!.... I hope this sector gets momentum again!...

    Anyways, Raghu Maccha, sooper appa, Pongal gift nalla irukku! Now, consolidate dollar price too.. its you who has to act to get Rupee strong in short term..! Govt can only get it in long term way!

    DisAgree [6] Agree [10] Reply Report Abuse


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