Real Estate Business To Boost From RBI Rate Cut

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The realty business is ready to get a boost from the rate cut by the RBI. The rate-sensitive sector has kept the investors away for the last couple of years because of the high-interest rates. Raghuram Rajan’s smart move to cut the rate by 25 bps would bring a movement in the inactive sector.

On Thursday, real estate planner DLF and India’s largest home capitalist HDFC were among the top gainers at the BSE. The DLF stock closed at 10.8% earnings and at the same time; HDFC was up by 7.3 percent.

In the period of about twelve months, between April 2012 and May 2013, when the RBI cut the repo rate by 125 bps from 8.5% to 7.25%, home prices increased evidently. The Residex (the housing price index prepared by the National Housing Bank) value in Jaipur(Rajasthan) went up by almost 35 percent and that in Pune, Delhi and Mumbai increased by over 10 percent representing a correlative average walkabout in home prices during that period of time.

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