NEW DELHI: India’s real estate sector feels that a repo rate cut by the Reserve Bank of India (RBI) in its latest Monetary Policy Committee (MPC) meeting outcome would have boosted confidence among buyers amidst a slowdown phase and additional pressure caused by US President Donald Trump’s new 25% tariffs on Indian goods.
The RBI kept the policy repo rate unchanged at 5.5% and retained its ‘Neutral’ stance in the August MPC meeting, citing inflation stability and geopolitical uncertainty. The decision follows a cumulative 100 bps rate cut earlier this year and comes as former US President Donald Trump threatens a 25% tariff on Indian exports, a move that could impact nearly $100 billion in outbound trade and shave 30 bps off FY26 GDP growth.
Anuj Puri, Chairman - ANAROCK Group said that the Indian real estate weathers unrelenting turbulence as the sentiment is pressured by Trump’s new 25% tariffs and a notable 20% plunge in housing sales across top metros, as per the latest ANAROCK data. In Q2 2025 alone, just 96,285 homes were sold, a steep fall from 120,335 a year ago, indicating increasing buyer hesitancy and market uncertainty.
“A rate cut leading to lower interest rate environment would have particularly boosted the affordable housing segment, which has been under considerable pressure in recent years,” added Puri.
ANAROCK data shows that average residential prices across the top 7 cities combined have increased by 39% in the last two years alone – from INR 6,470 per sq. ft. as of Q2 2023 to INR 8,990 per sq. ft. as of Q2 2025. “The affordable housing segment’s fate may be further dampened by the ongoing global trade tensions and tariffs imposed by the Trump administration. This is largely because of its impact on the MSMEs – the key target audience of the affordable segment,” stated Puri.
Samir Jasuja, Founder & CEO, PropEquity said that with the ongoing trade war, geo-political tensions, volatility in global financial market and tech sector layoffs in India may have some repercussion on India’s economic growth going forward including in sectors like exports, real estate etc.
“Housing sales have also come down from its highs. While the RBI has cut repo rate by 100bps in 2025 to 5.5%, it was, however, pertinent that the apex bank continued its easing stance in its announcement today to provide support to India’s growth amidst falling inflation and good monsoon,” added Jasuja.
G. Hari Babu, National President of NAREDCO believe that to further strengthen the real estate sector, the repo rate should be brought down below 5.5%, and the RBI should consider reducing the repo rate in the next MPC.
“The real estate market needs a boost right now. A reduction in the repo rate will encourage developers to start new projects and home buyers to buy homes during the festive season. This move will increase confidence among home buyers due to low interest rates, which will increase housing demand, and especially the affordable housing segment can benefit from it,” stated Babu.
What realtors and industry experts said
Piyush Bothra, Co-Founder and CFO, Square Yards: “The decision to maintain the repo rate at its current level reflects a 'watchful waiting' approach amidst a mixed economic landscape. Domestically, India's growth remains resilient, and recent inflation figures have been benign, staying below the RBI's target range. However, the global economic environment presents uncertainties, including volatile commodity prices and the monetary policy stances of major central banks, which could have spill-over effects on our economy. For the residential sector, a further cut would have been a welcome festive bonus for homebuyers. This stability ensures that borrowing costs remain manageable and avoids any sudden shocks to the market. The onus now squarely falls on the banks to enhance the transmission of previous rate cuts, ensuring that the benefits of lower interest rates are fully passed on to homebuyers.”
Shishir Baijal, Chairman and Managing Director, Knight Frank India: “The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. While inflation has moderated, it remains uneven, and the central bank is understandably cautious given the persistent risks from global commodity prices, geopolitical tensions, and volatile capital flows. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provide much-needed predictability and helps preserve affordability for homebuyers. Notably, some banks have already reduced consumer home loan rates - a move that supports housing demand, especially in the mid-income and low-income segment – and more transmission in interest rates is underway. This policy continuity, coupled with easing credit conditions and steady economic growth can provide a boost to the affordable housing categories.”
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE: “With a cumulative 100 basis points cut since February 2025, the focus is now on improved credit flow and broader economic momentum. The announcement reflects ongoing demand recovery and a steady growth outlook, which reinforces market confidence for sectors including real estate, manufacturing, and infrastructure. For the real estate sector specifically, this signals stability and offers long-term predictability to developers and homebuyers. The upcoming festive season and range-bound inflation are expected to boost the market momentum further.”
Yateesh Wahaal, Director, M3M India: “For the real estate sector, stable interest rates will strengthen end-user confidence and attract fresh investments across key regions. It also reflects the RBI’s commitment to sustaining economic momentum and encouraging long-term capital flows.“
Avneesh Sood, Director, Eros Group: “With global uncertainties, tariff risks, and uneven industrial growth, a neutral stance provides predictability and cushions sentiment. Rural consumption remains resilient, and public capex is driving infrastructure momentum. This combination, if sustained, can lay the groundwork for a stronger and broader-based real estate recovery in the coming quarters.”
Amit Jain, CMD, Arkade Developers: For the residential real estate sector, this signals welcome stability in home loan interest rates—an important factor for both first-time homebuyers and seasoned investors. With inflation now projected at 3.1% for FY26 and GDP growth maintained at 6.5%, the central bank’s balanced approach underscores that price stability and economic momentum can indeed coexist. This clarity is especially timely as we approach the festive season, a traditionally strong period for housing demand. Despite external headwinds like global tariff uncertainties, India’s housing market continues to demonstrate resilience, driven by a sustained demand for quality homes and consistent policy support. The outlook remains optimistic.”
Rohit Kishore, CEO, Hero Realty: “Stable borrowing costs will benefit both homebuyers and developers. For buyers, it means continued lower EMIs and easier access to home loans, which can encourage more people to buy homes. For developers, the sustained interest rates will help manage costs and finish projects on time.
This policy continuity will boost confidence in the market and maintain demand for homes and office spaces.“
Mayank Jain, CEO, KREEVA: "While a further rate cut could have served as a timely catalyst to boost market sentiment and accelerate economic revival, the central bank’s steady approach still sends a strong signal of macroeconomic stability. This consistency will help anchor buyer confidence and indirectly benefit the real estate sector. Developers are expected to remain active, particularly in emerging growth corridors, as the environment continues to support both demand and supply-side expansion. Overall, this decision contributes to a stable platform for continued momentum."
Vikas Dua, Founder & Director, Chintamanis: “We have high hopes that the government will sustain this momentum with supportive policies in the upcoming monetary policy announcement. While interest rates are just one factor, a further reduction would boost the confidence of buyers and will further induce their investment & consumption decision.”
Amit Goyal, MD, India Sotheby’s International Realty: The RBI’s neutral policy stance, coupled with a 6.5% GDP growth outlook and a softer inflation trajectory, reflects a steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India's housing sentiment. With home loan rates easing with 3 previous repo rate cuts in 2025, we believe the momentum in home buying will remain cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties.”