Real Estate Sector Struggles as Repo Rate Stays Unchanged Amid Tariff Woes
In the second quarter of 2025, just 96,285 homes were sold, down sharply from 120,335 in the same period last year, highlighting the growing uncertainty and buyer hesitation in the Indian real estate market.
Real EstateRepo RateTariffsHousing MarketEconomic GrowthReal Estate NewsAug 06, 2025
Real Estate News:NEW DELHI: India’s real estate sector is grappling with a challenging environment as the Reserve Bank of India (RBI) kept the policy repo rate unchanged at 5.5% during its latest Monetary Policy Committee (MPC) meeting. This decision comes amidst a slowdown phase and additional pressure from US President Donald Trump’s new 25% tariffs on Indian goods.
The RBI retained its 'Neutral' stance, citing inflation stability and geopolitical uncertainty. This decision follows a cumulative 100 basis points (bps) rate cut earlier this year. However, the new tariffs threaten to impact nearly $100 billion in outbound trade and could shave 30 bps off FY26 GDP growth.
Anuj Puri, Chairman of ANAROCK Group, commented on the sector's unrelenting turbulence. “The sentiment is pressured by Trump’s new 25% tariffs and a notable 20% plunge in housing sales across top metros,” he said. According to ANAROCK data, in Q2 2025, only 96,285 homes were sold, a steep fall from 120,335 in the same period last year, indicating increasing buyer hesitancy and market uncertainty.
“A rate cut leading to a lower interest rate environment would have particularly boosted the affordable housing segment, which has been under considerable pressure in recent years,” added Puri. ANAROCK data shows that average residential prices across the top seven cities have increased by 39% in the last two years alone, from INR 6,470 per sq. ft. in Q2 2023 to INR 8,990 per sq. ft. in Q2 2025.
Samir Jasuja, Founder and CEO of PropEquity, noted the broader economic implications. “With the ongoing trade war, geopolitical tensions, volatility in global financial markets, and tech sector layoffs in India, there could be some repercussions on India’s economic growth, including in sectors like exports and real estate.”
G. Hari Babu, National President of NAREDCO, emphasized the need for a rate cut to support the real estate sector. “To further strengthen the real estate sector, the repo rate should be brought down below 5.5%, and the RBI should consider reducing the repo rate in the next MPC. The real estate market needs a boost right now. A reduction in the repo rate will encourage developers to start new projects and home buyers to buy homes during the festive season.”
Industry experts and realtors shared their insights on the RBI’s decision. Piyush Bothra, Co-Founder and CFO of Square Yards, said, “The decision to maintain the repo rate at its current level reflects a 'watchful waiting' approach amidst a mixed economic landscape. Domestically, India's growth remains resilient, and recent inflation figures have been benign, staying below the RBI's target range. However, the global economic environment presents uncertainties, including volatile commodity prices and the monetary policy stances of major central banks, which could have spill-over effects on our economy.”
Shishir Baijal, Chairman and Managing Director of Knight Frank India, added, “The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. While inflation has moderated, it remains uneven, and the central bank is understandably cautious given the persistent risks from global commodity prices, geopolitical tensions, and volatile capital flows. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provides much-needed predictability and helps preserve affordability for homebuyers.”
Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East, and Africa, stated, “With a cumulative 100 basis points cut since February 2025, 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.”
Yateesh Wahaal, Director of M3M India, noted, “For the real estate sector, stable interest rates will strengthen end-user confidence and attract fresh investments across key regions. It also reflects the RBI’s commitment to sustaining economic momentum and encouraging long-term capital flows.”
Avneesh Sood, Director of Eros Group, added, “With global uncertainties, tariff risks, and uneven industrial growth, a neutral stance provides predictability and cushions sentiment. Rural consumption remains resilient, and public capex is driving infrastructure momentum. This combination, if sustained, can lay the groundwork for a stronger and broader-based real estate recovery in the coming quarters.”
Amit Jain, CMD of Arkade Developers, said, “For the residential real estate sector, this signals welcome stability in home loan interest rates—an important factor for both first-time homebuyers and seasoned investors. With inflation now projected at 3.1% for FY26 and GDP growth maintained at 6.5%, the central bank’s balanced approach underscores that price stability and economic momentum can indeed coexist. This clarity is especially timely as we approach the festive season, a traditionally strong period for housing demand.”
Rohit Kishore, CEO of Hero Realty, emphasized the benefits for both homebuyers and developers. “Stable borrowing costs will benefit both homebuyers and developers. For buyers, it means continued lower EMIs and easier access to home loans, which can encourage more people to buy homes. For developers, the sustained interest rates will help manage costs and finish projects on time.”
Mayank Jain, CEO of KREEVA, stated, “While a further rate cut could have served as a timely catalyst to boost market sentiment and accelerate economic revival, the central bank’s steady approach still sends a strong signal of macroeconomic stability. This consistency will help anchor buyer confidence and indirectly benefit the real estate sector. Developers are expected to remain active, particularly in emerging growth corridors, as the environment continues to support both demand and supply-side expansion.”
Vikas Dua, Founder and Director of Chintamanis, expressed hope for supportive policies. “We have high hopes that the government will sustain this momentum with supportive policies in the upcoming monetary policy announcement. While interest rates are just one factor, a further reduction would boost the confidence of buyers and will further induce their investment and consumption decision.”
Amit Goyal, MD of India Sotheby’s International Realty, concluded, “The RBI’s neutral policy stance, coupled with a 6.5% GDP growth outlook and a softer inflation trajectory, reflects a steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India's housing sentiment. With home loan rates easing with three previous repo rate cuts in 2025, we believe the momentum in home buying will remain cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties.”
The RBI retained its 'Neutral' stance, citing inflation stability and geopolitical uncertainty. This decision follows a cumulative 100 basis points (bps) rate cut earlier this year. However, the new tariffs threaten to impact nearly $100 billion in outbound trade and could shave 30 bps off FY26 GDP growth.
Anuj Puri, Chairman of ANAROCK Group, commented on the sector's unrelenting turbulence. “The sentiment is pressured by Trump’s new 25% tariffs and a notable 20% plunge in housing sales across top metros,” he said. According to ANAROCK data, in Q2 2025, only 96,285 homes were sold, a steep fall from 120,335 in the same period last year, indicating increasing buyer hesitancy and market uncertainty.
“A rate cut leading to a lower interest rate environment would have particularly boosted the affordable housing segment, which has been under considerable pressure in recent years,” added Puri. ANAROCK data shows that average residential prices across the top seven cities have increased by 39% in the last two years alone, from INR 6,470 per sq. ft. in Q2 2023 to INR 8,990 per sq. ft. in Q2 2025.
Samir Jasuja, Founder and CEO of PropEquity, noted the broader economic implications. “With the ongoing trade war, geopolitical tensions, volatility in global financial markets, and tech sector layoffs in India, there could be some repercussions on India’s economic growth, including in sectors like exports and real estate.”
G. Hari Babu, National President of NAREDCO, emphasized the need for a rate cut to support the real estate sector. “To further strengthen the real estate sector, the repo rate should be brought down below 5.5%, and the RBI should consider reducing the repo rate in the next MPC. The real estate market needs a boost right now. A reduction in the repo rate will encourage developers to start new projects and home buyers to buy homes during the festive season.”
Industry experts and realtors shared their insights on the RBI’s decision. Piyush Bothra, Co-Founder and CFO of Square Yards, said, “The decision to maintain the repo rate at its current level reflects a 'watchful waiting' approach amidst a mixed economic landscape. Domestically, India's growth remains resilient, and recent inflation figures have been benign, staying below the RBI's target range. However, the global economic environment presents uncertainties, including volatile commodity prices and the monetary policy stances of major central banks, which could have spill-over effects on our economy.”
Shishir Baijal, Chairman and Managing Director of Knight Frank India, added, “The RBI’s decision to hold rates steady underscores its calibrated approach amidst a complex economic backdrop. While inflation has moderated, it remains uneven, and the central bank is understandably cautious given the persistent risks from global commodity prices, geopolitical tensions, and volatile capital flows. For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provides much-needed predictability and helps preserve affordability for homebuyers.”
Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East, and Africa, stated, “With a cumulative 100 basis points cut since February 2025, 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.”
Yateesh Wahaal, Director of M3M India, noted, “For the real estate sector, stable interest rates will strengthen end-user confidence and attract fresh investments across key regions. It also reflects the RBI’s commitment to sustaining economic momentum and encouraging long-term capital flows.”
Avneesh Sood, Director of Eros Group, added, “With global uncertainties, tariff risks, and uneven industrial growth, a neutral stance provides predictability and cushions sentiment. Rural consumption remains resilient, and public capex is driving infrastructure momentum. This combination, if sustained, can lay the groundwork for a stronger and broader-based real estate recovery in the coming quarters.”
Amit Jain, CMD of Arkade Developers, said, “For the residential real estate sector, this signals welcome stability in home loan interest rates—an important factor for both first-time homebuyers and seasoned investors. With inflation now projected at 3.1% for FY26 and GDP growth maintained at 6.5%, the central bank’s balanced approach underscores that price stability and economic momentum can indeed coexist. This clarity is especially timely as we approach the festive season, a traditionally strong period for housing demand.”
Rohit Kishore, CEO of Hero Realty, emphasized the benefits for both homebuyers and developers. “Stable borrowing costs will benefit both homebuyers and developers. For buyers, it means continued lower EMIs and easier access to home loans, which can encourage more people to buy homes. For developers, the sustained interest rates will help manage costs and finish projects on time.”
Mayank Jain, CEO of KREEVA, stated, “While a further rate cut could have served as a timely catalyst to boost market sentiment and accelerate economic revival, the central bank’s steady approach still sends a strong signal of macroeconomic stability. This consistency will help anchor buyer confidence and indirectly benefit the real estate sector. Developers are expected to remain active, particularly in emerging growth corridors, as the environment continues to support both demand and supply-side expansion.”
Vikas Dua, Founder and Director of Chintamanis, expressed hope for supportive policies. “We have high hopes that the government will sustain this momentum with supportive policies in the upcoming monetary policy announcement. While interest rates are just one factor, a further reduction would boost the confidence of buyers and will further induce their investment and consumption decision.”
Amit Goyal, MD of India Sotheby’s International Realty, concluded, “The RBI’s neutral policy stance, coupled with a 6.5% GDP growth outlook and a softer inflation trajectory, reflects a steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India's housing sentiment. With home loan rates easing with three previous repo rate cuts in 2025, we believe the momentum in home buying will remain cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties.”
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 have housing sales been affected in Q2 2025?
In Q2 2025, just 96,285 homes were sold, down from 120,335 in the same period last year, indicating a 20% decline.
What are the implications of Trump's 25% tariffs on Indian goods?
The 25% tariffs on Indian goods could impact nearly $100 billion in outbound trade and shave 30 bps off FY26 GDP growth.
Why is a rate cut important for the affordable housing segment?
A rate cut leading to a lower interest rate environment would boost the affordable housing segment, which has been under considerable pressure in recent years.
How does the RBI's decision affect homebuyers and developers?
Stable borrowing costs will benefit both homebuyers, with lower EMIs and easier access to home loans, and developers, by helping manage costs and finish projects on time.
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