Real Estate Stocks Surge as RBI Cuts Repo Rate by 50 Basis Points
Real estate stocks experienced a significant boost on June 6 following the Reserve Bank of India’s (RBI) announcement of a 50 basis point cut in the repo rate, reducing it to 5.5%. The move is expected to lower home loan interest rates, thereby increasing demand in the housing sector.
Real EstateRbiRepo RateProperty MarketHousing DemandReal EstateJun 06, 2025
Lower interest rates are expected to make home loans more affordable, thereby improving housing demand and encouraging more property purchases, especially in the affordable and mid-income segments.
The Nifty Realty index surged 4.45% to 1,037.25, while the BSE Realty index rose sharply by 4.55% to 8,054.96 as of 1:35 PM. Leading the rally was Godrej Properties, which jumped 6.82% to Rs 2,469.45. Prestige Estates followed with a 5.98% gain to Rs 1,723.45, while DLF climbed 5.88% to Rs 874 and Oberoi Realty advanced 5.28% to Rs 1,895.70.
Other gainers included Sobha, up 4.66% to Rs 1,679.60, and Lodha, which rose 3.79% to Rs 1,517.30. Mid-cap and smaller real estate firms also saw positive momentum, with Signature Global up 3.63%, Brigade Enterprises gaining 2.09%, Phoenix Mills rising 1.47%, and Anant Raj Ltd inching up by 0.62%.
Anuj Puri, Chairman of ANAROCK Group, said the rate cut was widely anticipated due to easing inflation trends and would directly support buyer affordability. He noted that home loan EMIs are expected to become cheaper, which could significantly boost demand, particularly in the affordable and mid-income housing categories.
Puri also pointed out that the affordable housing segment had suffered the sharpest declines post-pandemic, with its sales share falling from 38% in 2019 to just 18% in 2024. However, a notable 19% reduction in unsold inventory indicates persistent end-user demand.
Puri further explained that the reduction in the Cash Reserve Ratio (CRR) would help inject more liquidity into the banking system, enabling banks to lend more freely. This would not only allow developers better access to capital, helping them complete projects on time, but would also give banks room to reduce home loan rates.
He cautioned, however, that global trade tensions and increased costs of imported construction materials could dampen the overall benefit, particularly in the luxury and commercial segments. Sustained growth, he said, will depend on further policy support and greater reliance on domestic sourcing.
Echoing similar optimism, Harsh Jagwani, Managing Director at Notandas Realty, called the rate cut a “welcome move” that provides a much-needed boost to both aspiring homebuyers and long-term investors. He emphasized that lower borrowing costs will lift demand across residential segments and also reduce capital costs for developers.
Jagwani observed that the RBI’s shift to a neutral policy stance reflects growing confidence in India’s macroeconomic stability, even as it keeps an eye on evolving liquidity trends. He added that while this could be the final rate cut for the year, the move will spur broader economic recovery across sectors.
Amit Mamgain, Director at Yugen Infra, also praised the RBI's decision, stating that reduced repo rates could further energize demand in both residential and commercial markets.
He pointed out that home loans dipping below 7.75% would make housing more affordable, particularly for middle-income buyers in Tier 2 and Tier 3 cities, where interest rates play a major role in buyer decisions.
According to Mamgain, this cut will not only help borrowers through cheaper EMIs but also build investor confidence and strengthen overall market sentiment.
Frequently Asked Questions
Why did the RBI cut the repo rate by 50 basis points?
The RBI cut the repo rate by 50 basis points to support economic growth amid moderating inflation. This move is expected to make home loans more affordable and boost demand in the real estate sector.
How will the rate cut affect home loan EMIs?
The rate cut is expected to make home loans cheaper, thereby reducing monthly EMIs for homebuyers. This will make housing more affordable, particularly for middle-income buyers.
Which real estate stocks saw the most significant gains?
Godrej Properties, Prestige Estates, DLF, and Oberoi Realty were among the top gainers, with Godrej Properties leading the rally with a 6.82% increase.
What are the potential challenges to the real estate sector despite the rate cut?
Despite the rate cut, global trade tensions and increased costs of imported construction materials could pose challenges, particularly in the luxury and commercial segments.
How will the reduction in the Cash Reserve Ratio (CRR) benefit the real estate sector?
The reduction in the CRR will inject more liquidity into the banking system, enabling banks to lend more freely. This will help developers access capital more easily and complete projects on time, while also allowing banks to reduce home loan rates.
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