Tuesday, 4 May 2021

RBI maintains ‘status quo’ to cushion the economy in

         Dr. Samantak Das, Chief Economist and Head of Research & REIS, JLL India.

RBI maintains ‘status quo’ to cushion the economy in the light of the pandemic resurgence; low mortgage rates to provide room for continued residential real estate growth

 

“The resurgence of the pandemic and resultant concerns of its impact on economy and businesses demanded a resilient approach. The Central bank has responded by taking an accommodative stance, kept the repo rates unchanged. The health of the economy has now become more contingent on the progress of vaccination and control of pandemic. In such a scenario, holding the repo rates at 4% is likely to cushion the impact on economy due to intermittent and regional lockdowns. The government’s decision to retain the inflation target of 4% with a tolerance band of +/- 2 percentage points for the coming five years provides continuity to the stance of the monetary policy committee.


Demand for residential real estate has revived as homebuyers took advantage of the lowest mortgage rates along with realistic pricing and various freebies and options rendered by developers. Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed during pre-Covid times across the top 7 cities. The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. The recent surge in the spread of the pandemic is likely to impact the home buying sentiment for a few months. However, we believe that overall residential sales are likely to surpass the pre-Covid levels in the coming quarters.”

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