RBI's Rate Hold to Boost Housing Demand in Festival Season, Experts Predict
The Reserve Bank of India's decision to maintain the repo rate at 5.5 percent will keep home loan interest rates stable, supporting housing demand, especially during the festive season, according to developers and real estate experts.
RbiRepo RateReal EstateHousing MarketFestival SeasonReal Estate NewsAug 06, 2025
The decision would help sustain housing demand and support sentiment, as home loan EMIs will remain unchanged, they said. “As we progress into FY26, this policy pause is likely to maintain homebuyer confidence and support sustained demand in high-growth micro-markets,” said Manju Yagnik, vice-chairperson of Nahar Group and senior vice president of NAREDCO- Maharashtra.
After three continuous rate cuts this year, the RBI’s monetary policy committee decided to keep the key repo rate unchanged at 5.5 percent. By keeping the repo rate at 5.5 percent, the RBI signalled a continued focus on balancing growth and inflation, Yagnik said. US President Donald Trump’s decision to slap a 25 percent US tariff on Indian exports adds uncertainty to global trade flows, making this cautious, steady policy stance even more relevant, she said.
For the real estate sector, a stable rate means continued affordability of home loans, especially critical in a market already seeing robust interest among mid- and premium-segment buyers, she said. Combining rate stability with strong urban infrastructure momentum and growing aspirations for lifestyle-driven housing, the sector expects this period to attract new buyers and investors alike, reinforcing long-term sector resilience, she said.
The RBI’s decision reflects a measured approach amid evolving macroeconomic conditions, Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said. With a cumulative cut of 100 basis points since February, the focus is now on improved credit flow and broader economic momentum. The announcement reflects ongoing demand recovery and a steady growth outlook, which reinforces market confidence for sectors including real estate, manufacturing, and infrastructure.
For the real estate sector specifically, this signals stability and offers long-term predictability to developers and homebuyers. The upcoming festive season and range-bound inflation are expected to boost the market momentum further, he said.
Anarock group chairman Anuj Puri said Indian real estate is weathering unrelenting turbulence as the sentiment is pressured by 25 percent tariffs by the US and a 20 percent plunge in housing sales across top metros. According to Anarock data, in Q2 2025, just 96,285 homes were sold, a steep fall from 120,335 a year ago, indicating increasing buyer hesitancy and market uncertainty.
Amid these headwinds, the central bank’s policy choices come with high relevance to initiate a turnaround and arrest further market deterioration, Puri said. The RBI’s repo rate decision also takes cognizance of the tariff uncertainty and its possible impact on the Indian economy. Homebuyers are driven by long-term confidence rather than short-term rate fluctuations, he said.
Given the upcoming festive season, developers may look to keep the market momentum going with offers and flexible payment plans, which may help improve affordability for many genuine buyers, Puri said. Uddhav Poddar, CMD, Bhumika Group, said with inflation easing to a multi-year low and signs of monetary transmission improving, the central bank has rightly chosen to assess the cumulative impact of past rate cuts.
At the same time, global headwinds, particularly the recently imposed US tariffs require cautious navigation. By maintaining a neutral stance, the RBI has preserved its flexibility to respond to evolving conditions. For the real estate sector, this stability offers a degree of confidence as we plan for the upcoming festive quarter and beyond, he said.
Frequently Asked Questions
What is the current repo rate set by the RBI?
The current repo rate set by the RBI is 5.5 percent.
How does the RBI's decision to hold the repo rate affect the housing market?
The decision to hold the repo rate at 5.5 percent keeps home loan interest rates stable, supporting housing demand and maintaining market confidence, especially during the festive season.
What is the impact of US tariffs on the Indian real estate market?
US tariffs add uncertainty to global trade flows, which can pressure the real estate market sentiment and increase buyer hesitancy. However, the RBI's cautious approach helps in maintaining stability.
What are the key factors driving the real estate sector's resilience?
Key factors include rate stability, strong urban infrastructure, growing lifestyle aspirations, and the upcoming festive season, which can attract new buyers and investors.
How do developers plan to boost market momentum during the festive season?
Developers may offer flexible payment plans and special offers to improve affordability and attract genuine buyers, thereby sustaining market momentum.
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