Realty stocks gain up to 7 per cent as RBI pauses rate hike

NEW DELHI: The Reserve Bank of India’s (RBI) surprise decision to keep repo rate unchanged at 6.5% is widely welcomed by the country’s real estate sector. The sector believes that a pause in rate hike cycle would help maintain high demand for housing units amid emerging challenges from global front.

Since May 2022, the RBI has increased the repo rate by 250 bps to tame rising inflation. This has pushed interest on home loans to nearly 9% from a low of 6.5% in the 10-month period. “This is indeed good for the residential realty market, which faces a tough road ahead amid layoffs by large corporates world over. India is not decoupled from global economic dynamics and their invariable impact on the housing uptake here. The RBI’s decision to keep rates unchanged comes as a welcome respite to homebuyers,” said Anuj Puri, Chairman, ANAROCK Group.

As per Anarock, housing sales in January-March quarter (Q1,2023) hit an all-time high in the last decade, with about 113,770 units sold across top seven cities. Industry veteran Niranjan Hiranandani said this act of relief will restore confidence in homebuyers’ sentiment and boost demand in real estate.

“The industry body (NAREDCO) now calls for fiscal intervention from government to cool the inflationary heat caused by persistent geopolitical turbulence due to collapse of foreign banks, supply chain challenges, and global financial instability,” added Hiranandani. Following the RBI’s decision, realty stocks advanced up to 7% on Thursday.

The NSE Realty index was the top sectoral gainer and closed the session higher by 2.84%, as against a minor 0.24% gain by benchmark NSE Nifty 50. Shares of Godrej Properties closed nearly 6.5% higher while DLF advanced over 4%. Puravankara gained 7%, Oberoi Realty 4% and Mahindra Lifespace ended over 2% higher.