Real estate developers and experts believe that the RBI’s decision to cut the repo rate after five long years will boost sentiment and support housing demand. Reduced rates will also lower borrowing costs for both homebuyers and developers, further encouraging investment in the real estate market.
“For the real estate market, lower borrowing costs are expected to boost demand for home loans, making housing more affordable and stimulating sector growth. This is a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches. We hope interest rate cuts will be passed on to consumers and that home loan rates become more attractive, which, combined with the earlier announced tax incentives, will spur residential demand across different price brackets, but especially in the below INR 50 lakh category, which has seen continued weakening of demand,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The Monetary Policy Committee (MPC) of the Reserve Bank of India, led by Governor Sanjay Malhotra, cut the repo rate by 25 basis points to 6.25%. This is the first-rate cut by the central bank in five years. This decision comes a week after the government decided to cut personal income tax to boost consumption.
Anuj Puri, Chairman - ANAROCK Group, said that in terms of the impact on the housing sector of the RBI's decision to reduce the repo rate by 25 bps, this piggybacks on the recent taxation benefits announced in the Union Budget. “As such, it is undeniably a major boost to homebuyers, particularly for affordable housing buyers. Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce – as long as banks pass on the key benefits to buyers,” said Puri.
He added, “Given that housing prices have risen across the top 7 cities in the last one year, this breather is welcome and timely. Commercial real estate, especially office spaces, can also benefit from lower borrowing costs for businesses, and lower rates also make REITs more appealing since investors look for stable returns in a falling interest rate environment.”
Puri, however, also said that the rate cut may be less effective if rising property prices are not controlled and if inflation remains as high as it is now. Also, it remains to be seen if banks pass on the full benefit to borrowers in a timely and seamless manner.
Ashish Puravankara, Managing Director of Puravankara, said that the MPC’s unanimous decision reflects its focus on maintaining a durable alignment of inflation with the target while supporting growth. He added, “It complements the government's fiscal policy, tax reliefs, and investment-driven measures announced in the recent Union Budget. Today's decision will also have a large impact on housing demand in the country. With control of inflation, we expect more cuts in the upcoming meetings, further boosting demand, especially in the mid-segment housing.”
Nitin Bavisi, CFO of Ajmera Realty & Infra India, said that while the rate cut signals a shift, the policy stance remains neutral, leaving room for further action based on evolving economic conditions.
“With FY26 inflation projected at 4.2%, following a 4.5% rate in Q4, the stage is set for a lower rate environment. This reduction, combined with tax slab cuts, enhanced TDS limits on rent, and home loan interest deductions, has enhanced affordability and increased disposable income, particularly benefiting the housing sector. Branded real estate players offering integrated townships are poised to see significant demand, positioning the housing industry as the biggest beneficiary of this economic momentum,” added Bavisi.
Real Estate industry executives and experts on repo rate cut:
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE:
“RBI’s decision to cut the repo rate by 25 bps will allow more liquidity to flow in and further stimulate growth while simultaneously bringing relief for borrowers. This much-awaited move by the RBI is poised to significantly boost the housing segment by stimulating demand, particularly among first-time homebuyers. It also offers an opportunity for developers to launch new projects, as this decision will also bring relief from cost pressures on construction costs. Overall, the rate cut will pave the way for expanded opportunities for buyers as well as developers.”
Anurag Mathur, CEO, Savills India:
“While Budget 2025 chose to provide a consumption push to the economy with a change in income tax slabs, the RBI has provided a stimulus to GDP growth by way of a rate cut. The rate cut will lead to reduced borrowing costs that would encourage credit flow, making home loans more affordable for homebuyers. This will, in turn, boost consumption and investment by incentivizing all real estate stakeholders. The residential market will likely see stimulated demand, particularly in the affordable and mid-income segments. End-users, as well as individual and institutional investors, will increase their property purchases. Developers would benefit from lower financing costs, which could lead to an acceleration in new construction projects. Overall, a strong push that augurs well for driving demand in the residential sector.”
Pradeep Aggarwal, Founder & Chairman, Signature Global (India):
“For real estate, a rate cut after such a long period is a significant boost. Lower borrowing costs will improve home affordability, strengthening buyer sentiment, particularly in the mid-income and premium housing segments. Historically, reduced interest rates have triggered an upswing in housing demand, benefiting both homebuyers and developers. Additionally, improved credit access will support developers in securing funding for project execution, ensuring steady supply and timely deliveries. The real estate sector, contributing nearly 7% to India’s GDP and projected to reach 13% by 2030, will gain further momentum as urbanization accelerates and infrastructure investments expand. This move will also positively impact allied industries such as cement, steel, and construction materials, creating a multiplier effect on employment and overall economic activity. With a sustained focus on affordability and sustainable development, India’s housing market is well-positioned for long-term growth.”
Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited:
“This rate reduction is set to bring down lending rates, making borrowing more accessible and affordable for consumers. In particular, it serves as a strong catalyst for the real estate sector, encouraging fence-sitting homebuyers to move forward with their purchase decisions. Given the RBI Governor’s assurance that all economic factors will be carefully considered to maintain balanced growth and stability, this cut could be helpful in sustaining economic momentum.”
Samir Jasuja, Founder and CEO of PropEquity:
“The 25bps cut in the repo rate, along with the announcements in the Budget towards boosting consumption, will help increase economic activity and direct investments towards the real estate sector, especially in the affordable and mid-income housing. Making borrowing cheaper will not only help homebuyers, both new and old, but also provide liquidity to the developers.
According to PropEquity, the supply of homes in the affordable and mid-income category (priced Rs 1 crore and below) across the top 9 cities has dipped by 36% in the last two years and 30% in the last year (2024), with Hyderabad and NCR witnessing drastic falls in supply in this category.”
Amit Jain, Chairman and Managing Director, Arkade Developers:
“The rate cut, coupled with the government’s recent tax slab revisions, enhanced TDS limits on rental income, and increased home loan interest deductions, directly impacts the housing sector by boosting affordability and increasing disposable income for homebuyers. These measures will not only improve homeownership sentiment but also strengthen demand across residential segments… At this juncture, we are optimistic about the positive ripple effects this decision will have on housing demand, home loan affordability, and overall economic growth.”
Mohit Mittal, Chief Executive Officer, MORES:
"For real estate investors, this move makes financing more attractive and could drive renewed interest in residential and commercial assets. We expect institutional investments to see an uptick, as lower interest rates enhance overall returns in the sector. However, sustained policy support and financial reforms will be key to ensuring long-term stability and growth."
