RBI hiked repo rate, the rate at which the central bank lends short term money to commercial banks, by 25 basis points (0.25 per cent) to 6.50 percent. This is expected to lead to higher interest rates on housing, auto and other personal loans. This is first time in nearly five years that RBI has hone for a back to back hike, having increased repo rate by 25 bps to 6.25 percent in its last policy meet in june. Last time RBI had increased the repo rate consecutively in 2013. Trade tensions, crude oil prices, poor economic activity, rising retail inflation have been considered as the primary factors behind the hike in repo rate.
I think that hike in repo rate will impact the real estate sector as the revised rate would result in costlier EMIs for the home loan.
Real Estate Sector seems to have taken a big hit from demonetisation, with builders seeing their sales drop in last three months and now holding their hopes on buyers coming to market with ‘white money’.
Buyers appear to be holding back their purchase plans on hopes that interest rate would fall and property prices would be fall post demonetisation in residential sector, which some see as a cleansing of a sector infected with prohibited funds. As per industry data, resale or secondary market, where maximum black money gets deposit, has been worst-affected as transaction almost dried up and barring some interest in trademark properties, due to lack of cash after fighting of old 500 and 1000 notes.
Though, many builders and property experts also said it is too early to say that black money has been completely removed from the sector though it has become especially difficult to effect cash transactions as of now. But previous year have been many policies with RERA (Real Estate Regulatory Act), Benami Properties Act and low circle rate, would be help in destroying black money in real estate sector to a great scope and improve the industry value.
Due to demonetisation, in primary and secondary market, were affected during November and December as buyers postponed their buying decisions not only in real estate but across the entire sector. Sales in the primary market have started to improve, with banks lowering interest rates on home loans, in NCR Market, which huge delay in projects completion. Real Estate Market will become totally transparent.
January 16, 2017 /
by Shweta Dixit
/ in Cities
, home loan
, real estate news
, Real Estate News
, repo rate