RBI's Rate Pause Boosts Real Estate: Benefits for Homebuyers
The Reserve Bank of India's decision to hold the repo rate steady at 5.5% has been welcomed by the real estate sector, offering stability and predictability that could boost housing demand, especially in the affordable and mid-income segments.
RbiRepo RateReal EstateHomebuyersHousing MarketReal Estate NewsAug 06, 2025
With inflation showing signs of softening and GDP growth projected at 6.5%, the central bank’s pause has been seen as a well-calibrated move. Real estate sector experts believe that this policy continuity offers affordability and predictability—key drivers for housing demand, especially in the affordable and mid-income segments, as the festive season approaches.
Stability in monetary policy augurs well for homebuyers and real estate developers, particularly in the affordable and mid-income segments, says Vimal Nadar, National Director and Head of Research, Colliers India. “The lowering of interest rates in the recent past is expected to be fully passed on to the end users in upcoming quarters, who are likely to benefit from reduced financing costs. With the festive season approaching, developers can further capitalize on this momentum with timely project completions, new launches, and festive offers & discounts.”
Shishir Baijal, Chairman and Managing Director of Knight Frank India, adds, “The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provide much-needed predictability and helps preserve affordability for homebuyers.”
Many experts noted that the transmission of earlier repo rate cuts is still in progress. While some banks have already slashed home loan rates, more are expected to follow suit. “The onus now squarely falls on the banks to enhance the transmission of previous rate cuts, ensuring that the benefits of lower interest rates are fully passed on to homebuyers,” remarked Piyush Bothra, Co-Founder and CFO of Square Yards.
The RBI’s neutral policy stance, backed by stable urban demand and strong consumption trends, has lent confidence to the housing sector. “We believe the momentum in home buying will remain cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties,” stated Amit Goyal, MD of India Sotheby’s International Realty.
Developers are expected to remain optimistic about new launches, especially in emerging corridors where buyer demand is showing resilience. “While a rate cut could have further lowered home loan interest rates—encouraging more first-time buyers and end-users to enter the market—the current environment still supports growth,” said Prateek Tiwari, Managing Director of Prateek Group.
According to Samir Jasuja, Founder & CEO of PropEquity, although the RBI has cut the repo rate by 100 bps in 2025 to 5.5%, housing sales have come down from their peak. “Housing sales in India’s top 9 cities fell by 17% YoY in H1 2025 to 2.08 lakh units and sales value fell by 10% to Rs 2.94 lakh crore. Launches have also declined by 18% YoY in H1 2025 to 1.99 lakh units.”
Despite the dip in new launches and sales, experts say a steady policy rate helps maintain buyer confidence, a critical component of the sector’s long-term momentum. “The consistency will help anchor buyer confidence and indirectly benefit the real estate sector,” said Mayank Jain, CEO of KREEVA.
The National Capital Region (NCR) market, in particular, continues to exhibit strength driven by lifestyle aspirations, infrastructure growth, and demand for larger homes. “The NCR real estate market is on a strong footing and the demand continues to be strong with the region’s growing lifestyle aspirations, massive infrastructure development, and demand for bigger homes leading to a surge in luxury housing,” said Shiwang Suraj, Director & Founder of InfraMantra.
With the festive season on the horizon, experts suggest developers are in a position to further capitalize on this momentum. Timely project completions, new launches, and festive offers are expected to drive buyer interest and sustain sectoral momentum. “With the festive season approaching, developers can further capitalize on this momentum with timely project completions, new launches, and festive offers & discounts,” said Vimal Nadar, National Director and Head of Research, Colliers India.
Overall, while a further rate cut might have added more fuel to the recovery, the RBI’s cautious and steady approach continues to offer a strong foundation for the real estate sector’s growth in the second half of 2025.
Frequently Asked Questions
What is the current repo rate set by the RBI?
The current repo rate set by the RBI is 5.5%.
Why is the RBI holding the repo rate steady?
The RBI is holding the repo rate steady to maintain stability and predictability in the economy, which helps preserve affordability for homebuyers and supports the real estate sector.
How will the repo rate pause affect homebuyers?
The repo rate pause will help maintain buyer confidence and indirectly benefit the real estate sector by ensuring predictability and affordability for homebuyers.
What is the projected GDP growth for India?
The projected GDP growth for India is 6.5%.
What are the key drivers for housing demand in the affordable and mid-income segments?
The key drivers for housing demand in the affordable and mid-income segments are affordability and predictability, especially during the festive season.
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