Real estate players and experts on Tuesday termed as disappointing the decision of the RBI to hike the short-term lending rate maintaining that this would adversely impact the demand for property in the ongoing festive season.
They are of the view that RBI’s move to raise the repo rate by 0.25 per cent could make funds costlier for both developers as well as consumers. ``It’s a disappointing announcement. It will hurt growth. At present, there is a need to boost growth and expand supply side of the economy,’’ DLF group executive director Rajeev Talwar said.
Mr. Talwar said that RBI’s continued stance on raising interest rates during the last three-and-a-half years has resulted in lower economic growth. `The RBI needs to discuss the issue with policy experts like the Prime Minister and the Finance Minister and draw out a common strategy for fiscal and monetary policies,’’ he added.
ADVERTISEMENT
Brotin Banerjee, managing director and CEO, Tata Housing said RBI's move to increase the repo rate is on expected lines as guarding against inflation and normalising the rupee is the priority. However, prospects for the real estate industry are already muted due to high interest rates and high cost of construction. ``This is acting as a dampener on consumer sentiment in the run-up to the festive season. RBI needs to ensure that it takes essential steps to support the economic growth, considering the low investor and consumer sentiment prevalent in the market,’’ he stated.
Industry body for developers CREDAI demanded that policy makers should find a solution to manage inflation without compromising on economic growth. ``The economy slowdown is hurting one and all and the continuing price rise, coupled with job losses, could even lead to law and order problems,’’ CREDAI chairman Lalit Kumar Jain said.
Property consultant Knight Frank felt that the RBI should have deferred the repo rate hike, helping many sectors, including real estate to capitalise on the positive consumer sentiment ahead of the festive season. ``Global economies have shown firming up of activities and as a result, Indian exports have shown an upward trend. The exchange rate has shown stability and agricultural output is expected to improve even further in the coming months. Keeping this in view, the central bank could have adopted a wait and watch approach by deferring the repo rate hike,’’ Knight Frank India chief economist and director research, Samantak Das said.
ADVERTISEMENT
Royal Institute of Chartered Surveyors (RICS) South Asia managing director Sachin Sandhir said the move is likely to increase pressure on developers, who are already struggling to raise funds for construction amidst reduced lending from banks.