RBI Governor Shaktikanta Das on Thursday emphasised the importance of keeping a close eye on inflation and reiterated the need to maintain Arjuna’s eye on the inflation scenario as headline inflation still remains above the target of 4%.

“The last leg of the journey is always the toughest,” Shaktikanta Das said, adding, “We will do whatever necessary to ensure long-term inflation expectations remain anchored… We will remain watchful and proactive in dealing with emerging risks to price and financial stability.”

With headline inflation still above the target, experts weighed in on the potential impact on the housing market. Pradeep Aggarwal, Founder & Chairman of Signature Global (India), said: “Home loan borrowers have embraced the previous interest rate hikes, and as long as the home loan interest rates hover around 9% per annum, it is unlikely to have a significant impact on housing demand."

Amit Goyal, Managing Director of India Sotheby’s International Realty, said: “The pause in rate hikes would instil a sense of optimism among borrowers and the momentum in home sales will continue."

Vimal Nadar, Head of Research at Colliers India, said: “As home loan rates are already at elevated levels of 9% and above, the cut in inflation forecast is a significant breather for lenders, developers and homebuyers. First-time homebuyers will be better placed to take decisions in a stable lending rate regime.”

Adhil Shetty, CEO of BankBazaar, said: “The worst seems to be over. Interest rates are stabilising. Inflation permitting, we may see home loan rates drop before the end of 2023.”

Piyush Bothra, Co-founder and CFO of Square Yards, said: “Homebuyers know that their EMIs down the line will only decrease. A lot of fence-sitters are expected to jump in, and developers are likely to cash in on this pent-up demand. We are at the beginning of a multi-year real estate bull market buoyed by high disposable incomes, high affordability and moderate-to-low interest rates.”

Gulam Zia, Senior ED at Knight Frank, expressed concern about the impact of rising interest rates on the real estate market. He notes that while developers have been able to adapt to the market and avoid raising prices, the home loan interest rate is a concern. If another 100 basis points are passed onto customers, it could have an impact on the industry. However, in the interim, he does not see any concern for the industry. The rate of growth in affordable housing is not as good as other segments due to rate hikes but it is still growing at a decent rate.

Meanwhile, Kaushik Das, Chief Economist at Deutsche Bank, who expects the first rate cut from RBI in February 2024, said: “Whoever was expecting or if markets were expecting that October-December RBI could move by cutting rates; we do not see any kind of reason why RBI should.” (AP Photo)