Property Market to Be Hit By RBI's Hike in Key Interest Rate

According to real estate developers’, the Reserve Bank's move of hiking the key policy rate will affect the property sales. This is more so in the residential area. Real estate builders were disappointed at the move.

But real estate consultants and firms were pitching that this might be the last round of monetary tightening adopted by the central bank.

According to the Chairman of Confederation of Real Estate Developers Association of India (CREDAI), they stated that they were turned off by the development. He also added that the move might add to the woes of the developers’ community.

He also stated that in terms of liquidity and sales, the market might see its bottom. Moreover, there might be some efforts to resuscitate the economy and market in a strong manner. The builders were intensely looking forward to the March review.

With an intention to control inflation, RBI raised the key policy rate by 0.25 per cent to 8 per cent.This was a move which would mean higher EMIs besides pushing the cost of borrowing for the corporate.

According to Chairman of a realty firm, he stated that it was a very disheartening move by RBI to hike repo rate. This will certainly not help RBI control inflation.

Besides this, he also added that the move by RBI might reassure banks to increase their lending rates. This is already beyond reach of home buyers. This is just going to dishearten home buyers.

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According to CREDAI-NCR President,he stated that presently there was marked slowdown in the overall economy and the property market. Hence, there might not be too much negative affect on sales.

Another person who was expressed his views was the consultant of Knight Frank who stated that the hike in policy rate was "contrary to the expectations". He stated that this kind of rate increase might lay a negative affect in the short term.

He further added that even though the present inflation figures showed a downward trend, what was higher was the consumer inflation. This was known to be putting pressure on the currency.