Rate Cut Sparks Hope for ₹50 Lakh-₹1 Crore Housing Market, Realty Execs Say
A 50 basis point rate cut by the Reserve Bank of India (RBI) has rekindled optimism in the mid-income housing segment, particularly in the ₹50 lakh to ₹1 crore range. Industry leaders believe this move could significantly boost demand and affordability.
Rbi Rate CutReal EstateHousing MarketMidincome SegmentAffordabilityReal Estate MumbaiJun 10, 2025
Baijal stated, “These rate cuts would really have a meaningful impact in this segment, and I do hope with the transmission… the demand for housing picks up.” The front loading of the 50 basis points rate cut and the transmission to EMIs will most definitely help affordability and boost the residential segment.
Sanjay Dutt, Managing Director and CEO at Tata Realty & Infrastructure, added that rate cuts help both buyers and developers. While homebuyers may upgrade to better homes, developers also benefit from lower capital costs, helping improve sectoral health. Both executives agree that the affordable and mid-income segments remain central to the next leg of housing growth.
The ₹50 lakh to ₹1 crore segment, which accounted for 45% of the market in 2020, has seen its share drop to 25%. Despite the market expanding from 160,000 units a year to 350,000 units, this segment has been lagging. Baijal noted, “These rate cuts would really have a meaningful impact in this segment, and we hope with the transmission that is going, affordability picks up and the demand for housing picks up in this segment.”
When asked about inventory building up in some pockets, Baijal explained that looking at unsold inventory alone may not provide the full picture. The velocity of sales and the age of inventory are healthy, with the length of unsold inventory being less than eight quarters. The issue is more pronounced in the lower segments, while higher segments continue to show robust growth.
In Mumbai, the above ₹5 crore market is still showing strong growth, despite a 4% fall in registrations in May. Baijal stated, “We will have to look into this. It's very early days for a month's data to come in. But if you look at it, the same month, the total revenue collected by the exchequer was higher, and that is fundamentally based on the higher segments.”
Tata Realty has a balanced portfolio with over 10 million square feet of commercial space built and about 20 million under design and development. On the residential side, they have roughly 13 million square feet under design and development across major markets. In the last five to six years, their strategy has shifted to focus on key metros, particularly the premier and mid-segment, and select luxury segments.
Dutt emphasized that interest rate cuts are closely linked to real estate demand in the mid-premium to slightly more premium housing segment. From the consumer's perspective, lower EMIs matter, allowing them to upgrade from a compact three-bedroom to a more spacious one. For developers, the cost of capital, rising construction costs, and higher land costs make any relief on interest rates beneficial, improving the overall sector's health.
Frequently Asked Questions
How does a 50 basis point rate cut by the RBI benefit the housing market?
A 50 basis point rate cut by the RBI can significantly boost the housing market by lowering EMIs, making homes more affordable, and increasing demand, especially in the mid-income segment.
What is the current share of the ₹50 lakh to ₹1 crore housing segment in the market?
The share of the ₹50 lakh to ₹1 crore housing segment has dropped from 45% in 2020 to about 25% currently.
How do rate cuts impact both homebuyers and developers?
Rate cuts help homebuyers by reducing EMIs, allowing them to upgrade to better homes. For developers, lower capital costs improve the overall sector's health.
What is the current state of inventory in the housing market?
The velocity of sales and the age of inventory are healthy, with the length of unsold inventory being less than eight quarters. The issue is more pronounced in the lower segments.
What is Tata Realty's strategy in the residential market?
Tata Realty has shifted its strategy to focus on key metros, particularly the premier and mid-segment, and select luxury segments, with a balanced portfolio of commercial and residential properties.
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