Real Estate: The Reserve Bank has decided not to make any change in the interest rate in the June Monetary Policy Committee meeting. In such a situation, know what effect it will have on the real estate sector.
RBI MPC June 2023 Meeting: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided not to make any change in its repo rate in the current financial year 2023-24 in today’s meeting. After this meeting which lasted for three days, the Reserve Bank made this announcement on Thursday. In such a situation, the repo rate will remain at 6.5 percent for the time being (RBI Repo Rate). The real estate sector has heaved a sigh of relief after the decision not to increase the repo rate.
Good news for the real estate sector!
Real estate is a very price sensitive sector. Due to the continuous increase in the repo rate, it had become difficult for the low or middle income group to buy a house. Since the month of May 2022 till now, the central bank has increased the repo rate a total of 6 times. In such a situation, the repo rate had increased from 4 percent to 6.50 percent. This has a direct impact on the loan interest rates of the bank.
In the last one year, banks have increased their MCLR rates several times. Due to this, the burden of EMI has increased on the people. But since April 2023, the RBI has not made any change in the repo rate since the rein on inflation and it remains stable at 6.50 percent.
Sale of affordable houses was being affected
According to the report published in Economic Times, the increase in the repo rate affects more than 260 sectors in total. Due to the increase in loan interest rates, the burden of home loan was increasing on the people and in this era of inflation, its direct effect is visible on the sale of affordable houses.
In such a situation, since the decision of the central bank not to increase the repo rate, many people associated with the real estate sector have welcomed this decision. With this decision, the concern of the rising EMI of the customers will be removed and due to this, there will be a boom in sales in every segment of the real estate sector.
Positive effect will be seen in the festive season
Along with this, people associated with this industry say that after this decision of RBI, an increase in Housing Demand will be registered in India in the coming few months. Along with this, the stable interest rate will act as a catalyst during the festive season at the end of the year. However, some experts believe that after the lowest inflation rate of 18 months, RBI can also cut the repo rate in the coming times. In such a situation, people will get the benefit of affordable home loans. Due to this, the real estate sector will get its benefit in the coming times.
Inflation under control due to increase in repo rate
Due to the strict monetary policy of RBI, there has been a huge reduction in retail inflation in the country. In May 2022, when the RBI started increasing the repo rate, the country’s retail inflation rate was 7.8 percent. After this, after a continuous increase in the repo rate, it had come down to 4.7 per cent by April 2023, which is the lowest in 18 months. In the month of May, RBI estimates that this rate will come down to a 25-month low. It is likely to remain at the RBI’s target level of 4 per cent.
