MUMBAI, JANUARY 23, 2015: Does a reduction of 25 bps make a major difference to a home buyer? Niranjan Hiranandani, MD, Hiranandani Constructions Pvt Ltd (HCPL) feels it makes for a ‘good beginning’. “If this reduction in the repo rates on the auspicious occasion of Makar Sankranti is seen as a curtain raiser to similar positive decisions in days to come, it definitely makes a difference,” said the MD, HCPL.
“At one level, it certainly was positive in the context of ‘buyer sentiment’, these positives have been recorded in form of increased serious enquiries at site offices of on-going projects across the country. There is a positive vibe in real estate, especially in the residential segment. The aspect of the reduction having come as a complete surprise on the festive day of Makar Sankranti made it even better in terms of having a positive impact on home seekers.
It needs to be seen in perspective of the June – Dec 2014 period having been one where India had a new government at the Centre, and expectations were high. While real estate industry grappled with high cost of labour and raw material costs, it was expecting some move to reduce the burden on home buyers as also the industry. In December, we expected something positive from the RBI, which did not happen. said Niranjan Hiranandani. “In such a scenario, the RBI’s decision of reducing the repo rate by 25 bps in January 2015, which impacts home loan interest rates in form of a reduction, will be a respite for home seekers as also other stakeholders in real estate,” he said. On the aspect of 25 bps being a bit on the lower side, Niranjan Hiranandani said he saw this move as just the beginning. “Real estate developers and stakeholders can expect some more positive decisions from the RBI, which would boost the growth rate of the sector in days to come,” added the MD, HCPL.
“If in its next policy review in Feb 2015, the RBI comes up with moves that further reduces the home loan interest rates, the impact would be positive. In the present scenario in real estate, which some of my friends describe as a ‘low sentiment market’, even the minor change in the interest rates in home loans has been positive, definitely in terms of the sentiment. The sales which will happen, in turn, will translate into enhanced liquidity for real estate developers – and for the economy, a positive, given that real estate is among the major contributors to the GDP,” said Niranjan Hiranandani.
“The RBI's next policy review is in early February, and like most stake holders in real estate, I too expect the RBI to positively consider moves that would make cheaper home loans a reality - low interest rates on home loans can give a positive boost to real estate,” he said.
“Home seekers are definitely looking to moves from RBI in Feb, that will result in home loan interest rate cuts”, concluded Niranjan Hiranandani.
KEY WORDS: RBI, policy review, real estate industry, Niranjan Hiranandani, MD, Hiranandani Constructions Pvt Ltd, HCPL, home loans