RBI Maintains Repo Rate at 5.5%, Boosting Real Estate Stability and Festive Demand
The Reserve Bank of India's decision to hold the repo rate at 5.5% signals steady growth and market confidence, especially during the festive season. This move, along with recent GST cuts, is expected to boost consumer sentiment and housing demand.
RbiRepo RateReal EstateGst CutsFestive SeasonReal EstateOct 01, 2025
The policy pause creates a supportive ecosystem for the housing sector. GST cuts have improved affordability, and festive sentiment is encouraging potential buyers. Steady interest rates ensure predictable EMIs, which is crucial for both existing and new borrowers.
According to Anshuman Magazine, chairman and CEO of CBRE for India, South-East Asia, Middle East, and Africa, the announcement is likely to lift consumer sentiment and encourage greater demand across key sectors. “In real estate, it signals a steady growth outlook and reinforces market confidence, offering long-term predictability to developers and homebuyers,” he said.
The decision to hold the repo rate at 5.5% reflects a measured approach during the festival season and amid volatile global macroeconomic and policy conditions. Magazine expects consumption to improve and market momentum to accelerate further.
Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF), noted that the RBI's decision, along with GST cuts, will provide an impetus to consumption and help shield India’s growth from tariffs.
Festive boost meets affordability in the real estate sector. Anuj Puri, chairman of Anarock Group, stated that RBI's decision means existing borrowers will not see immediate EMI changes, while new borrowers will benefit from steady loan interest rates. According to Anarock data, residential sales in India's top 7 cities dropped 9% year-on-year to 97,080 units in Q3 2025. However, the overall sales value jumped 14% to Rs 1.52 lakh crore, indicating a shift towards premium and mid-segment homes.
Luxury housing sales jumped 85% year-on-year in the first half of 2025, nearing 7,000 units across major cities, as per CBRE-Assocham data. With GST on cement cut from 28% to 18%, construction costs are expected to fall by 3-5%, potentially reducing home prices by 1-1.5% for buyers. This can save homebuyers Rs 1-3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high.
Manju Yagnik, vice chairperson of Nahar Group and senior vice president of NAREDCO-Maharashtra, noted that the steady stance aligns well with the natural uptick in festival housing demand. “Predictable EMIs give buyers the confidence to act on long-awaited decisions, especially with the recent GST rationalisation already improving affordability. Developers, too, benefit from clarity in financing, enabling timely project planning and execution,” she said.
A stable rate environment, combined with festive sentiment, GST relief, and strong economic fundamentals, will ensure that real estate enters 2026 on a firm growth trajectory, Yagnik added.
Amit Modi, Director of NCR-based County Group, said that buyers who were on the fence will respond favorably and continue with real estate purchases this festival season. This decision also signals the RBI’s confidence in the Indian growth story, which will ultimately benefit the real sector.
Developers are eyeing long-term stability. Ashok Kapur, chairman of Krishna Group and Krisumi Corporation, said the decision offers much-needed predictability in planning. While a rate cut could have accelerated near-term demand, the real estate sector continues to benefit from earlier reductions and lending rate adjustments by commercial banks. For developers, it provides much-needed stability, enabling planning and timely execution while building confidence in the sector’s long-term prospects.
Frequently Asked Questions
What is the current repo rate set by the RBI?
The current repo rate set by the RBI is 5.5%.
How does the repo rate affect home loans?
A stable repo rate helps in maintaining steady interest rates on home loans, ensuring predictable EMIs for borrowers.
What impact do GST cuts have on the real estate sector?
GST cuts on construction materials like cement reduce construction costs, which can lower home prices and improve affordability for buyers.
Why is the festival season important for the real estate sector?
The festival season traditionally sees a peak in home-buying activity due to increased consumer sentiment and festive promotions.
How does the RBI's decision affect developers?
The decision to hold the repo rate provides developers with predictability in financing, enabling timely project planning and execution.
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