Pune: As rates rise once more, developers seek to reduce

Reserve Bank of Indias hike in repo rates by 50 basis points expected to raise home loans more expensive . Knight Frank estimates that if the rate increases are fully passed on, home prices could decrease by up to 11% for buyers .

PUNE: Real estate experts agree that developers will need to create a bit of wiggle room to bring more inventory to the homebuyers, even as they brace for a period of weak sales due to the Reserve Bank of India's hike in repo rates by 50 basis points, which is expected to raise home loans more expensive.Knight Frank has estimated that if the rate increases are fully passed on, home prices could decrease by up to 11% for buyers.To slam the brick wall against homebuyer affordability, developers are expected to introduce mitigating measures.These mitigating measures can be taken in the event of an interest rate increase, which in effect is an indirect price discount or other interest rate protection scheme, in which the interest rate is set by the home loan borrower and any increase by bank is borne by the real estate developer.

The rate increase was higher than expected, according to Anuj Puri, the chairman of the Anarock group.This is the third rate increase in a row in the last two months, marking the conclusion of the all-time best low-interest rates system, one of the key factors that fueled home sales across the country since the pandemic.Puri said in a statement that this whammy coincides with rising property prices due to the inflationary effects of primary raw materials, such as cement, steel, labour, etc.Others, such as JLLs India chief economist Samantak Das, said that another similar spike in interest rates of around 30-40 basis points in the next cycle could result in a mid-cycle slowdown in the residential sector, as well as affecting the forthcoming festive season.