The real estate sector may find the going tough with a likely fall in housing demand after the RBI kept key interest rates unchanged, belying expectations of rate cut.
Real estate industry, which was expecting a cut in the interest rates on housing loans, felt although property demand would continue to rise, a reduction in rates by the central bank could have given a boost to sales. In addition, it could have generated millions of jobs in the construction sector.
"Low interest rates would have definitely promoted demand in the real estate, but even at the existing rates, the demand would continue to rise as economy is on an upswing," DLF Group Executive Director Rajeev Talwar told PTI.
The banking and real estate sector had hoped that after a 0.75 per cent cut in interest rate by US Federal Reserve, the RBI would also bring down interest rate by 0.25 to 0.5 per cent.
The interest rate on home loans have gone up from around 8 per cent to over 12 per cent within two years, hitting the home sales in metros and tier-II cities as well.
"We would have liked a softening trend in interest rates to emerge from the credit policy, which would have helped not only the real estate industry but also in maintaining the tempo of economic growth," Omaxe CEO Arvind Parekh said.
"Unlike the US Federal Reserve which is always ahead of the curve, Indian Central Bank is behind the curve and we take action only when we see economy slowing down," Parekh added.
Global real estate consultant CB Richard Ellis Chairman and Managing Director (South Asia) Anshuman Magazine said that "on the backdrop of global concerns, I don't think the government wants to do anything adventurous."
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