Mr Lalit Kumar Jain, CREDAI Chairman
NEW DELHI: The real estate industry today hailed the RBI's decision to cut key interest rate, saying the move will boost housing demand and also improve sentiments in the sluggish property market.
However, real estate developers and property consultants demanded that interest rates be further reduced.
Encouraged by softening inflation, the RBI today decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.
"It's a great new year gift. It seems that the Finance Minister's effort has borne fruit to convince RBI governor. Given the background of RBI governor, even the small beginning will be marked as big signs of hopes for the Indian economy," DLF group executive director Rajeev Talwar told PTI.
The move would definitely encourage buyers now to invest in new homes, he added.
Commenting on the development, property consultant CBRE South Asia Chairman & MD Anshuman Magazine said, "This decision, early in the year, is a welcome one. Given the current market situation, this reduction in the base rate is an important step in improving home buying sentiments".
Magazine said that this move, hopefully with expected reduction in mortgage rates, would improve residential sales across the country, which have been suffering from general slackness in recent times.
Housing sales fell to 1.75 lakh units in the primary markets of seven major cities in 2014 against nearly 2 lakh units in the previous year due to demand slowdown, according to recent JLL India report.
CREDAI, the apex realtors' body, Chairman Lalit Kumar Jain termed RBI's decision as a "good beginning" but said "this is not enough."
"A reduction of 200 basis point (reduction of interest rate by 2%) within short span is needed," Jain said.
Echoing similar views, Credai President (Elect) Getamber Anand said: "Good small step, but industry is awaiting a more aggressive cut this quarter".
Global property consultant JLL India Chairman & Country Head Anuj Puri said: "I expect this cut in interest rate to be the first of several to come, and these will cumulatively make a big difference to home loan borrowers. As of now, the current rate cut will help revive market sentiment, which is very timely".
Cushman & Wakefield Executive Managing Director, South Asia, Sanjay Dutt said this move would instill hope and confidence in the real estate industry that a recovery in housing sales is around the corner.
SARE Homes MD David walker said the measure will cheer up the markets and hoped that financial institutions would pass on this reduction to customers, which in turn would boost housing demand.