RBI's Rate Pause Boosts Real Estate Market: Benefits for Homebuyers
The Reserve Bank of India's decision to hold the repo rate steady at 5.5% is seen as a positive move for the real estate sector, offering affordability and predictability, especially in the affordable and mid-income segments.
RbiRepo RateReal EstateHomebuyersStabilityReal EstateAug 06, 2025
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 and discounts.”
Shishir Baijal, Chairman and Managing Director, 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 falls on lenders to ensure that these benefits reach the end users. “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, Square Yards.
The RBI’s neutral policy stance, backed by stable urban demand and strong consumption trends, has lent confidence to the housing sector. Experts see momentum in home buying cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties. 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, 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, KREEVA. The 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 aspiration, massive infrastructure development, and demand for bigger homes leading to a surge in luxury housing,” said Shiwang Suraj, Director & Founder, 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.
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%.
How does the RBI's decision to hold the repo rate steady benefit the real estate sector?
The decision to hold the repo rate steady provides stability and predictability, which are key drivers for housing demand, especially in the affordable and mid-income segments. This helps maintain buyer confidence and supports the growth of the real estate market.
What is the projected GDP growth for India?
The projected GDP growth for India is 6.5%.
How are banks expected to respond to the RBI's rate pause?
Banks are expected to continue passing on the benefits of previous rate cuts to homebuyers, ensuring that the reduced interest rates are fully transmitted to the end users.
What are the key factors driving the NCR real estate market?
The NCR real estate market is driven by lifestyle aspirations, massive infrastructure development, and a growing demand for larger homes, particularly in the luxury segment.
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