Real Estate’s Late Revival

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This hike will impact credit growth and further delay the revival of the real estate sector. Construction activity had started to pick up slowly after the implementation of policy reforms, but the rise will hurt consumer sentiment. The sector was looking for some encouragement that would move the needle towards accelerated growth after RERA and GST. Interest rates and regulation will decide the long-term success of the real estate sector in India.
While the immediate impact may be marginal, it comes immediately on the back of a previous rate hike in June, and may further slow down activity in the realty market. In case of new customers, this will be about relooking at their budgets, further delaying their purchase and impacting the developer’s sales velocity or off take.
But this may lead to a hike in home loan rates, but the overall real estate sector now rests on a strong footing and buying decisions may not be altered by these marginal changes. These numbers clearly indicate that the markets are now recovering from the shocks of structural changes and policy reforms. In fact, genuine home buyers have welcomed these actions, which have imbibed the muchneeded financial discipline, accountability and transparency in the sector.
The rate-hike by the central bank could further hurt the real estate sector. According to industry experts, the increase would dampen buyers’ sentiments.