Real estate developers said on Tuesday that RBI's decision to cut cash reserve ratio will help improve the liquidity position of various sectors, including realty, but felt that interest rates should be brought down to boost housing demand.
"The CRR cut will bring in liquidity. It will help the real estate market which is cash starved.
"However, it is important to see the interest rate shall have to come down to facilitate the home seekers to buy homes," Confederation of Real Estate Developers' Association of India president Lalit Kumar Jain said.
In its third quarterly review of the monetary policy, RBI on Tuesday injected Rs 32,000 crore (Rs 320 billion) into the system by lowering the CRR by 50 basis point but kept the short-term lending rate unchanged in view of persisting inflationary concerns.
Echoing the view, Unitech managing director Ajay Chandra said: "A reduction in the CRR is a positive move from the RBI as it will increase the credit-supply to different sectors of the economy."
Chandra noted that an increase in the credit supply would also benefit the realty sector.
CREDAI chairman Pradeep Jain said the apex
"For real estate sector in particular, this will serve as a signal that interest rates will now ease.
"Buyers may opt for floating rate loans at this juncture since the signal is clear. Also the rising input cost will not leave any space for reduction of price," Jain, who is also chairman of Parsvnath Developers, said.
Credai chairman said that RBI has attempted to do a delicate balancing act between the need for growth and urgency of containing price line.
"In the end it (RBI) has acted with caution by keeping all rates unchanged and just by reducing CRR by 50 basis points.
"The tokenism has seen release of Rs 32,000 crore for the banking sector to lend. After the negative impact created by thirteen continuous rate hikes, this will prove insufficient to boost the growth," he added.
CHD Developers managing director Gaurav Mittal welcomed the policy saying that it would help in improving sentiments.
". . .This is just an indication that the sequence of rate rise is now behind us...the signal will serve as a boost for the real estate sector with sentiments of buyers turning favourable. This move is set to help stimulate growth," Mittal said.