RBI Repo Rate Cut to 5.25% Boosts Real Estate Market

In a major relief to homebuyers and consumers, the Reserve Bank of India (RBI) has announced a significant cut in the repo rate. The Monetary Policy Committee (MPC) met on December 3rd, 4th, and 5th to assess the current macroeconomic conditions and decide on the policy repo rate. After a thorough evaluation, the MPC unanimously voted to reduce the policy repo rate by 25 basis points (bps) to 5.25% with immediate effect. This reduction will also adjust the standing deposit facility (SDF) rate to 5.00% and the marginal standing facility (MSF) rate and Bank Rate to 5.50%. The MPC decided to maintain a neutral stance.

The RBI also introduced two liquidity-focused measures to ensure smoother financial conditions. The first measure involves Open Market Operation (OMO) purchases totaling Rs 1 lakh crore. The second measure is a three-year dollar–rupee buy–sell swap of $5 billion in December, aimed at aiding currency management. These measures are expected to provide additional support to the financial system and enhance liquidity.

This repo rate cut is particularly beneficial for the real estate sector, spurring optimism among industry leaders. They believe this policy move will accelerate homebuying, especially in the mid-income, premium, and luxury segments, while also strengthening the viability of commercial expansions and new investments.

Prashant Sharma, President of NAREDCO Maharashtra, commented, “The RBI’s decision to reduce the repo rate by 25 basis points is timely and reinforces India’s Goldilocks moment of low inflation and strong growth. A lower interest rate regime will provide much-needed momentum to housing demand, especially in the mid-income and premium categories where sentiment has remained strong. With inflation stabilizing and GDP growth accelerating, this policy move will not only improve homebuyer affordability but also support developers by reducing overall borrowing costs. We expect the rate cut to trigger improved sales velocity across key markets in Maharashtra.”

Shraddha Kedia-Agarwal, Director of Transcon Developers, added, “A 25 basis-point rate reduction, combined with a neutral stance, reflects the RBI’s confidence in India’s economic fundamentals. For end-users, especially in metropolitan markets like Mumbai, even a small EMI correction significantly impacts affordability. We expect this rate cut to boost sales in the luxury and upper-mid segments, where consumer sentiment is already positive due to rising disposable incomes and aspirational living. This policy move will give homebuyers the comfort and confidence to upgrade and invest.”

Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF), noted, “From a depositor’s standpoint, a 25bps cut in the repo rate may create concerns about declining returns on fixed deposits and other interest-bearing savings. However, lower rates support broader economic growth, and affluent investors and family offices often redirect capital toward higher-return products such as real estate–focused Category II AIFs to preserve real yields. This improves fundraising momentum for these funds. A lower interest-rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn expands opportunities for AIFs.”

Vijay Harsh Jha, Founder and CEO of property brokerage firm VS Realtors, mentioned, “The housing market has shown signs of a slowdown. A 25-bps rate cut and its proper transmission would provide homebuyers cushion from rising property prices, thereby encouraging home purchases. Developers, too, stand to benefit from lower borrowing costs, enabling faster project execution. The housing demand-supply dynamics seem to be aligning since the second half of 2024, and this pursuit of symmetry, in what developers are launching and what buyers want, will help propel the real estate market.”

Shilpin Tater, Managing Director of Superb Realty, stated, “The RBI’s 25 basis-point repo rate cut will positively impact both residential and commercial real estate. On the residential front, lower borrowing costs will enhance affordability and accelerate purchases, especially among first-time and young homebuyers. For the commercial segment, a softer rate environment improves capex viability, boosts investor sentiment, and encourages businesses to expand or upgrade office spaces. With GDP growth robust and inflation at record lows, this rate cut positions the sector for a strong growth cycle across both asset classes in FY2026.”

Kaushal Agarwal, Chairman of The Guardians Real Estate Advisory, struck a bullish note. “The RBI’s calibrated 25 bps rate cut is a welcome breather for the real estate sector at a time when the rupee’s volatility and global headwinds were beginning to cast uncertainty. Home loan EMIs are likely to see marginal improvement, which will further strengthen buyer confidence—particularly among fence-sitters waiting for a softer interest rate environment. With demand already buoyant and inflation at near-zero levels, this decision will lend additional stability and stimulate fresh investment into both residential and commercial real estate.”

Overall, the RBI’s repo rate cut is expected to inject a significant boost into the real estate market, making home ownership more affordable and encouraging new investments. The combination of lower interest rates and stable economic conditions is likely to drive a positive trajectory for the sector in the coming months.