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 "On the backdrop of global concerns, I don't think the government wants to do anything adventurous."

The developer community would have been happy had the government taken steps to increase the availability of debt and that too at a cheaper rate, Magazine said, adding that "if the interest rates on housing loan had come down, it could have given some relief to the consumers".

Magazine also said there would not be any major impact on the demand in housing sector and expects it to remain at the same level.

Pradeep Jain, Chairman of Parsvnath Developers [Get Quote], which is constructing over 100 projects across India, expressed similar views saying there would be enough buyers particularly in the housing segment.

"A non-mover credit policy from RBI has fallen short of the overall expectations of the real estate industry. Most were expecting a change in the lending rates especially to beef up the residential sector, which has seen a slowdown," Cushman and Wakefield Joint Managing Director Sanjay Dutt said. "RBI has been conservative and circumspect with the credit policy as announced today," Dutt said, adding that in the current economic environment, which is volatile across continents, RBI would perhaps be evaluating the market sentiments before making any paradigm shift in the policy.

"The industry was expecting some rate relief and is disappointed. However, I remain convinced that given the global slowdown and rate cuts in the US -- the rate cut is a given, it's just a question of when," Red Fort Capital, a private equity fund focusing on Indian real estate, Managing Director, Parry Singh said. Singh noted that the sale of residential products have slowed down due to rise in monthly installments.