Real estate sector anticipates surge in housing demand after RBI's rate cut
NEW DELHI: The real estate sector expects a boost in housing demand after the Reserve Bank of India (RBI), in its Monetary Policy Committee (MPC) meeting today, announced a 50 basis points reduction in the repo rate, bringing it down to 5.5%. The decision, led by governor Sanjay Malhotra, exceeded market expectations of a modest 25 basis points cut.
Anuj Puri, Chairman of ANAROCK Group said that this effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers. 'This can potentially boost demand in the Indian real estate sector, especially in affordable and mid-income segments. Affordable housing faced the sharpest pandemic fallout, with sales and new launches shrinking in the top 7 cities,' added Puri.
Further, the reduction in the Cash Reserve Ratio (CRR) is expected to boost liquidity in the banking system, resulting in more funds for lending. RBI reduced cash reserve ratio (CRR) by 100 bps from 4% to 3%, releasing Rs 2.5 lakh crore into the system.
'Developers will be able to access more capital for their projects, and this can positively impact project completion timelines. It also gives banks the option to reduce home loan interest rates, which will have again positively impact sentiment in the affordable and mid-income segments,' Puri said. Nevertheless, these positive impacts may be partially dampened by the ongoing global trade tensions and tariffs imposed by the Trump administration, which have increased the cost of imported construction materials and created economic uncertainty, he stated.
Samir Jasuja, Founder & CEO, PropEquity said that the move is timely. 'With retail inflation in the comfort zone, a deep cut in rate and liquidity measure will spur consumption and accelerate India's growth. Both these measures will ensure faster transmission of rate cut so that the new homebuyers are cushioned from the impact of rising housing prices and affordable housing segment also gets a fillip as even a slight reduction in home loan rates impacts buying decisions,' stated Jasuja.
Shekhar G Patel, President of CREDAI said that reduced EMIs are expected to significantly improve buyer sentiment and encourage first-time homebuyers to enter the market. 'We are particularly optimistic about its impact on the affordable housing sector, which has been under pressure on both the demand and supply sides. Lower interest rates will increase homebuyer affordability and improve the financial viability of affordable housing projects,' he added.
What Realty Players and industry experts said:
Pradeep Aggarwal, Founder & Chairman, Signature Global (India): This bold move by the apex bank comes at a crucial time when inflation is easing, and the economy requires strong stimulus to sustain growth. Lower borrowing costs will make home loans more affordable, thereby encouraging more buyers to enter the market. The reduction in CRR is expected to infuse significant liquidity in the banking system, which will prompt banks to lend even more.
The demand for mid and premium segment homes has already been on the rise following previous rate cuts, and this larger reduction will further accelerate interest from both homebuyers and investors. Additionally, the positive market sentiment around the possibility of further rate cuts this financial year bodes well for the real estate sector, paving the way for sustained growth and renewed confidence in the housing market.
Manik Malik, CFO, BPTP: The revision in the repo rate by 50 basis points to 5.5 % is a positive move for the economy, particularly for the real estate sector. This change in the policy rate is expected to ease borrowing costs, benefiting both developers and homebuyers. Developers will see financial relief through lower borrowing rates, enabling smoother project execution and keeping construction costs manageable. For homebuyers, this reduction in the repo rate translates into lower house loan EMIs, making homeownership more accessible. This could reignite buyer sentiment and boost demand in both the residential and commercial real estate markets.
Avneesh Sood, Director, Eros Group : The RBI's 50 bps rate cut, coupled with a CRR reduction, offers timely relief for a demand-sensitive sector like real estate. However, the impact will hinge on how swiftly and fully banks transmit these benefits to end borrowers. Affordable and mid-income segments, currently grappling with a 28% dip in residential sales, are most likely to respond. What's being overlooked is that this monetary easing also improves project-level viability—especially in Tier 2 and 3 cities—by lowering working capital costs. For developers, it's not just about demand-side sentiment but supply-side feasibility. With inflation cooling and liquidity unlocked, the runway is set for recalibrated pricing strategies and faster launches. But unless the transmission bottleneck is addressed, we risk wasting a pivotal opportunity to re-energize housing momentum.
Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra : Lowering the repo rate to 5.5% will have a cascading effect across the lending ecosystem, bringing home loan interest rates well below 7.75%—a highly encouraging development for both existing and prospective homebuyers. This rate cut is poised to create a significant improvement in affordability, especially for first-time purchase, this will help revive interest in mid-income and premium housing segments. For developers, available cheaper credit will ease liquidity constraints, accelerate project implementation, and improve delivery timelines. This will, in turn, provide much need cash flow to absorb the unsold inventory while generating fresh buyer interest that is good for the real estate value chain as a whole, thus enabling the growth of this sector and the broader economic revival by dint of its linkages with more than 200 allied industries.
Kanika Singh Chief Risk Officer–IMGC (India Mortgage Guarantee Corporations) : Repo rate is now at its lowest level in nearly 3 years. Furthermore, to support growth and stimulate the credit cycle in a challenging geopolitical and economic environment, the central bank could consider additional rate cuts during the year. With the repo rate reduction, Home Loan borrowers are definitely expected to benefit. We have already seen some return on investment (ROI) benefits from the previous two rate cuts being passed on to borrowers.
With a 50 bps rate cut, the home loan EMIs will come down substantially, provided the transmission occurs in real-time and not with a lag. While the global economic outlook continues to remain volatile due to trade policy uncertainty, India's growth projections remain positive, supported by strong domestic fundamentals aided by the government and, to some extent, private capex. The inflation outlook is also positive, supported by low core inflation and the expectation of a good harvest.
Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield: With this, the cumulative cut for this year of 1% is indeed going to help translate into lower EMIs and relatively better affordability, thereby helping the mid-segment housing across top tier cities. With inflation expected to remain below the 4% threshold, the timing of this policy move is both prudent and well-calibrated.
The decision comes at an opportune time as India is well-positioned to attract long-term investments across asset classes. Lower borrowing costs will significantly improve the viability of capital-intensive developments, particularly in high-growth sectors such as Global Capability Centers, Data Centers, and the Industrial & Logistics segment. This continued monetary easing underscores India's commitment to sustaining economic momentum while reinforcing its appeal as a stable, growth-oriented market.
Jash Panchamia, Executive Director, Jaypee Infratech Limited: This move paves the way for commercial banks to lower their lending rates, making credit more affordable and further boosting demand for real estate. With several scheduled commercial banks already offering home loans below 8 percent, today's decision may lead to a broader transmission of lower rates across the lending ecosystem. This will not only ease the financial burden on borrowers but also enhance affordability across housing segments, offering significant relief to homebuyers and providing a timely push for those planning property purchases.
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