Real estate developers said the Reserve Bank of India’s decision to cut its benchmark repo rate will boost demand for affordable housing but will not significantly improve the buyer sentiment in the mid-income segment. RBI cut its repo rate by 35 basis points to 5.40%, its fourth rate cut in a row. “For real estate, a rate cut of 35 bps is however insufficient to significantly improve buyer sentiment in the mid-income segment, which still has a staggering unsold inventory of 2.17 lakh units in the top seven cities,” said Anuj Puri, chairman at Anarock Property Consultants. Puri said the rate cut may boost demand for affordable housing, which accounts for some 240,000 unsold units in these cities, as this highly budget-sensitive segment is already enjoying other incentives. As per Anarock, this rate cut, even if adequately transmitted by banks, will not mean much for mid-income housing in tier-I cities where the main concern is unaffordable property prices and not interest rates. Builders said sales are likely to receive a fillip with progressive policies of the government such as its decision to lower the GST rate on affordable homes to 1% from 8%, without input tax credit (ITC). The government has also reduced the GST rate on projects under construction, which are not under the affordable housing segment, to 5% from 12%.

(Economic Times)