Realtors also welcome pause in rate hike

Mumbai, Apr 06 The RBI’s decision to hold rates is welcome as this will enhance buyers’ confidence especially after repeated hikes had already increased their acquisition cost.

The past few months have been testament to the fact that home buyer confidence is at an all-time high and are able to make confident purchase decisions.

The residential market's winning streak continued in the first quarter of 2023 despite the hike in interest rates over the past year. India’s housing sector is witnessing possibly the biggest boom in the last decade, driven by various factors such as affordability, lifestyle upgradation and aspiration of customers to own homes and we see this up-cycle continuing in 2023. Fuelled by both end-user and investor interest, the real estate market has shown resilience where buyers are carefully filtering out projects and looking for the right product mix in terms of affordability, accessibility and quality of living. Hence, in such a context, we welcome the decision of RBI to maintain the status quo.

Ramani Sastri - Chairman & MD, Sterling Developers, says, “Home loan interest rates are already at an alarmingly higher level of 9.5 per cent and above due to the increase in repo rates in the recent past. Another increase in policy rates means that interest rates on home loans may hit an all-time high and touch almost double-digit, which could have a substantial impact on buyer sentiments and affordability.

However, a cut in the key rates going forward would be widely appreciated as low-interest rates have played a crucial role in the revival of overall real estate demand and improvement in the liquidity situation, which is vital for the sector.”

There is also great confidence in real estate as an asset class compared to other asset classes today and in the long term, we expect markets will see sustained growth. With recovery of the economy, we expect that the real estate sector will contribute a substantial share to overall economic development, he said.

Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury themed homes in Goa, said, “We welcome this move by RBI as it helps in holding the interest rates and sustaining the growth momentum in the real estate sector. Rising interest rates have certainly impacted the sales of rate-sensitive segments of affordable and mid segment housing. However, the hike will not have significant impact on the luxury housing as the demand of home buyers in this segment is beyond these considerations.”

With the growing economy and an increasing number of high-net-worth individuals, the demand for luxury properties has seen exponential rise as the next generation of homebuyers are now looking for integrated gated communities that deliver on an assortment of modern amenities. We have seen significant increase in demand for high-end residential properties such as villas in suburban regions and vacation homes in places like Goa. The rich are looking at residential real estate as a favourable avenue for end use as well as an investment due to high returns, he said.

The surge in demand for luxury housing is a clear indication that people are looking for a lifestyle that mirrors their achievements and ambitions. Also, millennials’ growing purchasing power and higher disposable income is further stimulating the demand for lavish living. The aspirational middle-class millennials and Gen-Z are also emerging as key drivers of the realty economy.

Overall, this upsurge in demand for high-end properties is a testament to the enduring appeal of luxurious living. As buyers become progressively more discerning in their choices for a signature style of living, they will be more willing than ever before to take the leap and purchase luxurious homes. The unique blend of themed homes, lavish amenities, and unparalleled exclusivity that luxury properties offer will continue to be a compelling draw for the most discerning buyers and this trend is expected to continue in 2023 given change in lifestyles.