The residential real estate market has been going through some slowdown as sales and launches have been declining for the past few quarters. Housing sales in India’s top 9 cities, has been witnessing a Y-o-Y decline, falling from 3% growth Y-o-Y in Q1 2024 to (-)20% in Q1 2025.
The RBI’s decision to reduce repo rate by 50bps will make home loan cheaper and a cut in CRR will provide more rooms for banks to lend, cumulatively driving housing demand and economic growth. This is the third consecutive cut in repo rate taking the total cut in 2025 to 100 bps. Home loan rates have declined below 8% and with this rate cut, reduction in home loan rate will encourage fence-sitters.
Real estate experts say this is a bold move that will usher a new momentum to the real estate sector by lowering home loan rates, reducing EMIs, improving affordability and consequently a pickup in sales volume.
Samir Jasuja, Founder & CEO, NSE-listed data analytics firm PropEquity said the move is bold, timely and progressive given India’s growth momentum. This will enhance liquidity and spur credit growth. Both these measures will ensure faster transmission of rate cut so that the new homebuyers are cushioned from the impact of rising housing prices and affordable housing segment also gets a fillip as even a slight reduction in home loan rates impacts buying decisions.
Anuj Puri, Chairman – ANAROCK Group said this effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers. This can potentially boost demand in the Indian real estate sector, especially in affordable and mid-income segments. Affordable housing faced the sharpest pandemic fallout, with sales and new launches shrinking in the top 7 cities.
The PropEquity data also suggests that supply of homes in affordable and mid-income category (Rs 1 crore and below) fell by 36% in last two years (2022-24) in top 9 cities. In contrast, the supply of homes priced Rs 1 crore and above have risen by 48% in the last two years.
Vimal Nadar, National Director & Head, Research, Colliers India said for the real estate sector, this move is a strong tailwind: it lowers borrowing costs for buyers & developers, boosts homebuyer confidence, and enhances affordability, especially in the affordable and mid-income housing segments. This could lead to improved buyer sentiment, an increase in residential property enquiries and conversions, and a pickup in sales volumes across key urban markets.
Shrinivas Rao, FRICS, CEO, Vestian said major commercial banks are expected to pass on this benefit to homebuyers and developers by lowering interest rates, stimulating real estate demand and investments.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said with this cumulative 100 basis point cut in the policy interest rate we expect rekindling of the lower segments as affordability will witness a meaningful improvement for such homebuyers. We hope that the developer community too renews its focus in a big way to give longer legs to this housing market upcycle which is in its 5th year.
Piyush Bothra, Co-Founder and CFO, Square Yards said a 50-bps reduction will translate into meaningful EMI savings, improving affordability for homebuyers. It will also give developers greater confidence to move ahead with new launches, especially in the low-to-mid segments.
Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield said the cumulative cut for this year of 1% is indeed going to help translate into lower EMIs and relatively better affordability, thereby helping the mid-segment housing across top tier cities. Lower borrowing costs will significantly improve the viability of capital-intensive developments, particularly in high-growth sectors such as Global Capability Centers, Data Centers, and the Industrial & Logistics segment.
Shekhar G Patel , President, CREDAI said lower lending rates will directly enhance home loan affordability, particularly in interest-sensitive categories like mid-income and affordable housing. Reduced EMIs are expected to significantly improve buyer sentiment and encourage first-time homebuyers to enter the market.
Domnic Romell, President, CREDAI-MCHI and Director at Romell Group said such a reduction not only enhances buyer sentiment but also improves overall market confidence. We anticipate this move will activate fence-sitters and revive first-time buyer interest across urban and semi-urban pockets.
Dhaval Ajmera, Secretary, CREDAI-MCHI and Director at Ajmera Realty and Infra (I) said the RBI’s accommodative stance will help unlock latent demand and bring more households into the formal housing fold.
Nikunj Sanghvi, Treasurer, CREDAI-MCHI and MD at Veena Developers said peripheral markets and Tier 2 and Tier 3 cities are poised to benefit the most from the rate cut as they offer attractive price points, and with borrowing becoming cheaper, we expect to see a faster turnaround in inventory and increased sales traction.
Prashant Sharma, President, NAREDCO Maharashtra said a 50-bps reduction in the repo rate will help in bringing down home loan interest rates further, which is a welcome move for homebuyers and the real estate industry.
Ankur Jalan, CEO, Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF) said with expectations of further cuts in repo rate in FY26, the consequent decline in fixed deposit rates, currently under 7.5%, will disincentivize savers and HNI/UHNI investors, prompting them to look for potentially high return asset class like Alternative Investment Funds (AIFs) which not just has regulatory oversight but also offers risk diversification and high returns.
