RBI Repo Rate Cut to Revive Real Estate Sector of India

The recent RBI repo rate cut of 50 bps is hoped to invigorate the real estate sector of India after the seemingly long-persisting gloom, resulting in heaps of unsold inventory and sluggish sales, dampening the spirits of both developers and buyers. However, this early festive surprise of a rate cut of 50 bps instead of the expected 25 bps on the part of the Reserve Bank of India is being seen as a positive move for the sector.

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Considering the fact that majority of the realty investments in the country are funded by home loans, a rate cut will definitely boost the confidence of the buyers, encouraging them to take a leap of investment. The eased pressure of EMI will attract the home buyer thereby also increasing the demand for housing in the sector, opines Knight Frank Chennai Branch Director, Kanchana Krishnan.

The RBI’s decision of rate cut has come at a lucrative time when festivities are just round the corner. With a total abatement of 125 bps this year, this move is set to provide the buyers with the much awaited incentive to buy a property. The upcoming festivals will further make the decision to invest more ‘auspicious’.

This rate cute has especially come as a reward for all the first time home buyers who have been very patient, waiting for the right time to invest at the right prices. And with RBI’s announcement, the buyers are rejoicing.

However, this rate cut can only be truly effective once the banks start to pass on its benefit to their customers. There are still many banks that have not even passed on the previous rate cut of 0.25 bps to its customers, preventing any benefit to the sector till now. So the RBI must ensure its implementation this time for the sector to reap its benefits.

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