Builders see short-term impact on demand

New Delhi, June 8: Housing demand is likely to be affected in shortterm as home loans are set to become costlier following the RBI decision to hike repo rate by 50 basis points, according to real estate developers. The cost of borrowing for developers could also increase, impacting their profit margins, they said, while hoping that the move would control inflation, thus bringing down the cost of construction raw materials like steel and cement.

Builders welcomed the RBI's decision to increase the existing limits on individual housing loans by co-operative banks.

According property consultant Anarock, housing sales across seven cities increased 71 per cent in the JanuaryMarch period to 99,550 units, the highest quarterly sales since 2015, on low interest rates.

Credai national president Harsh Vardhan Patodia said: "With consumer loans and home loans getting costlier, there may be an impact on demand in the short term."

He welcomed the 100 per cent increase in the limit for individual housing loans by urban cooperative banks and rural cooperative banks.

Realtors body Naredco president Rajan Bandelkar said, "The rate hike will impact the robust sales in the residential housing segment, although in the shortterm. So far, the postCovid recovery and the bullish sentiments were supported by the low interest rate to a great extent."

However, Boman Irani, president of CredaiMCHI, said, the impact on the consumers in MMR (Mumbai Metropolitan Region) would be near zero.

Hiranandani group MD Niranjan Hiranandani said the home loan interest rate hike will "impair the home buying rally as payout in terms of EMI is scheduled to rise".

Tata Realty and Infrastructure MD & CEO Sanjay Dutt said the hike in the lending limits for cooperative banks is a positive step that will encourage housing development outside of Tier 1 and Tier 2 cities.