RBI Keeps Repo Rate Unchanged: Real Estate Sector Rejoices
Real estate developers have welcomed the Reserve Bank of India's decision to maintain the policy repo rate at 5.50%, citing it as a move that will provide stability, support affordability, and boost confidence among buyers and investors during the festive season.
RbiRepo RateReal EstateEconomic GrowthAffordabilityReal EstateOct 02, 2025
The Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep the policy repo rate unchanged at 5.50 percent and maintain a neutral stance. Consequently, the standing deposit facility (SDF) rate remains at 5.25 percent, while the marginal standing facility (MSF) rate and Bank rate remain at 5.75 percent. The MPC met on September 29, 30, and October 1 to deliberate and decide on the policy repo rate.
Siraj Saiyed, Director of Arete Group, expressed his approval of the decision. “Despite global challenges like U.S. tariffs and higher visa costs, domestic demand in both residential and commercial segments has remained resilient. The GST rationalization to 1 percent on affordable housing and 5 percent on other residential units has improved affordability, driving a 16 percent rise in residential sales in H1 2025. Commercial real estate also recorded a 12 percent increase in transactions across Tier-1 cities during the same period. As India progresses toward its Vikshit Bharat vision, real estate remains a key engine of long-term economic growth. The RBI’s decision to maintain the repo rate at 5.5 percent supports economic stability and offers homebuyers predictable EMIs.”
Industry leaders also highlighted the importance of affordability. Vishal Raheja, Founder and MD of InvestoXpert, commented, “The RBI’s Monetary Policy Committee’s unanimous decision to keep the repo rate unchanged at 5.5 percent and maintain a neutral stance provides stability for the real estate sector amid ongoing cost pressures. Steady rates help ensure that home loan EMIs remain manageable, supporting affordability, particularly as housing demand in major metros has risen by 10–12 percent over the past year. While this decision does not directly stimulate demand, it prevents additional financial strain on developers and buyers. The sector’s sustained growth will depend on broader demand recovery, policy support, and moderation in construction and input costs.”
The impact of stable rates is also being felt in specialized housing segments. Anantharam Varayur, Co-Founder of Manasum Senior Living Homes, noted, “The RBI’s decision to keep the repo rate unchanged at 5.5 percent reflects a balanced stance supporting growth while keeping inflation risks in check. With the GDP growth forecast revised upward to 6.8 percent, the outlook for the economy appears stronger and more stable. For the senior living housing sector, this stability in interest rates offers comfort by keeping borrowing costs predictable for homebuyers. However, the sector’s long-term trajectory will continue to depend on demand dynamics, affordability, and enabling government policies around elderly care. In such an environment, consistency in monetary policy provides a solid backdrop for the sector to innovate and expand responsibly.”
With the festive season around the corner, the RBI’s decision will not only help maintain affordability but also encourage steady investments and sustainable growth across different segments of the housing market. Developers see this policy stance as a confidence booster that balances inflation management with economic expansion, further strengthening real estate’s role in India’s growth story.
Frequently Asked Questions
What is the policy repo rate and why is it important?
The policy repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks. It is a key tool used to manage liquidity and control inflation. A lower repo rate can stimulate economic growth by making credit cheaper, while a higher rate can help control inflation by making credit more expensive.
How does the RBI's decision to keep the repo rate unchanged impact the real estate sector?
Keeping the repo rate unchanged provides stability and predictability in the cost of borrowing. This helps maintain affordability for homebuyers and reduces financial strain on developers, supporting both residential and commercial real estate markets.
What is the significance of the festive season for the real estate sector?
The festive season is a crucial period for the real estate sector as it often sees a surge in demand for new homes and investments. Festive offers and promotions can further boost sales and confidence among buyers.
How does the GST rationalization impact the real estate market?
The GST rationalization to 1 percent on affordable housing and 5 percent on other residential units has improved affordability and driven a significant increase in residential sales. This has been a positive factor for the real estate market.
What are the key factors driving the growth of the commercial real estate sector?
Key factors driving the growth of the commercial real estate sector include increasing demand for office spaces, retail properties, and industrial spaces. Economic stability, government policies, and improved infrastructure also play crucial roles in supporting this growth.
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