The Reserve Bank of India’s (RBI) decision to reduce the repo rate by 25 basis points to 6.25% is expected to significantly impact the real estate sector, particularly benefiting homebuyers and developers. Industry experts believe this move, coupled with recent tax benefits in the Union Budget 2025, will enhance affordability, drive housing demand, and provide a much-needed boost to the market.
A Long-Awaited Move
Dr. Niranjan Hiranandani, Chairman of NAREDCO, welcomed the decision, stating, “This long-awaited and strategic move signals resilience in the market. With inflation under control and economic growth on track, lower interest rates will nudge homebuyers towards ownership, enhancing sales velocity.”
Domnic Romell, President of CREDAI-MCHI, emphasized the combined impact of fiscal policies, saying, “The RBI’s decision, along with the Budget’s pro-middle-class measures like higher income tax exemptions and enhanced home loan interest deductions, will encourage homeownership and boost demand, especially in urban centers like the Mumbai Metropolitan Region (MMR).”
Positive Impact on Homebuyers and Developers
Anuj Puri, Chairman of ANAROCK Group, noted that the rate cut aligns well with the recent housing market trends. “With housing prices rising by 13-30% across top cities in the last year, reduced home loan rates will provide a timely breather for buyers. Many first-time homebuyers who were hesitant may now take the plunge.”
Dinesh Yadav, MD of Fine Acers, highlighted the broader economic impact: “This move enhances liquidity, promotes borrowing, and supports consumer demand. It will stimulate residential and commercial activity, benefitting allied industries like construction, cement, and steel.”
Vishal Raheja, Founder & MD of InvestoXpert.com, echoed similar sentiments, stating, “Lower borrowing costs will boost homebuyer sentiment, increasing affordability and driving residential sales. Combined with tax relief, this will revive demand in the housing sector.”
A Boost for the Economy
Amit Bhagat, CEO & MD of ASK Property Fund, stressed the importance of the move for affordable housing. “Declining affordability due to high prices and interest rates had impacted housing sales. This rate cut, along with Budget initiatives like SWAMIH Fund 2, will help sustain demand and drive sales growth.”
Sunil Sisodiya, Founder of Geetanjali Homestate, highlighted the macroeconomic impact: “With inflation stable and GDP growth projected at 6.7%, this policy shift will increase liquidity, making real estate a more attractive investment.”
Cautious Optimism
While the real estate sector welcomes the rate cut, experts caution that its full impact depends on banks passing the benefits to consumers. “The cut will have a significant bearing on homebuyer sentiment, but rising property prices and inflation could limit its effectiveness,” noted Vimal Nadar, Head of Research at Colliers India.
Shrinivas Rao, CEO of Vestian, pointed out potential challenges, saying, “This move aims to boost liquidity, but could also put pressure on the rupee in international markets, affecting foreign investments.”
Piyush Bothra, CFO of Square Yards, summed up the overall sentiment: “Lower borrowing costs, stable inflation, and economic growth create strong tailwinds for real estate. ‘Acchhe din’ for the sector are set to continue.”
Conclusion
The RBI’s first repo rate cut in five years is seen as a major step toward improving housing affordability, boosting demand, and strengthening the real estate sector. As banks begin passing on the benefits, both homebuyers and developers are expected to gain, ensuring sustained momentum in the property market.
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