Realtors expect rise in housing demand with likely fall in mortgage rate following repo rate cut

New Delhi: The RBI decision to cut repo rate by 100 basis points since February, coupled with relief in personal income tax in the Budget, will have a positive impact on demand for residential properties, especially affordable and mid-income homes, according to real estate developers.

The RBI's move to reduce repo rate by 50 basis points on Friday will ease the financial burden of homebuyers and builders as well, they said, while hoping that banks pass on the benefits of the reduction in repo rate at the earliest.

The RBI reduced the key interest rate (repo) by 25 bps each in February and April.

Hailing the monetary policy, Tata Realty and Infrastructure MD and CEO Sanjay Dutt said the RBI decision augurs very well for the realty sector and hoped that the banks would pass on the benefit at the earliest.

"With inflation under control and a cut in personal income taxes announced in the last budget, this rate cut is a further shot in the arm for boosting the demand on the residential side. EMIs will be lower. In an era of rising construction costs and an increase in the cost of doing business, the rate cut will reduce borrowing costs of developers." Venkatesh Gopalakrishnan, Director Group Promoter's Office, MD - Shapoorji Pallonji Real Estate, said this bold step is encouraging for the real estate sector, particularly in the affordable and mid-income housing segments, where demand is highly sensitive to interest rate changes.

"A lower repo rate directly results in reduced EMIs, thereby enhancing home loan affordability for potential homebuyers. The significant rate cut will ease the financial burden on buyers, making homeownership more attainable and prompting fence-sitters to act. Additionally, the improved affordability and positive market sentiment are likely to spur investments and accelerate momentum across the sector," he said.

According to many property consultants, housing sales declined in the January-March quarter of this year on a high base effect and a sharp rise in housing prices in the last three years.

Property developers and consultants believe that the 100-basis-point reduction in repo rate since February will help boost sales in the coming months.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa at CBRE, said this reduction is expected to lead to lower borrowing costs, increased liquidity, and enhanced consumer spending power.

Hiranandani Group Chairman Niranjan Hiranandani said, "...this rate reduction is set to bolster credit lending, accelerate buying velocity, and enhance development momentum." Emaar India CEO Kalyan Chakrabarti said this policy shift will support homebuyers and developers.

"Additionally, the CRR cut and asset reforms will further enhance liquidity access, fostering robust growth in the industry," he added.

Sunteck Realty CMD Kamal Khetan said, "We expect a strong uptick in residential inquiries and conversions as EMIs become more manageable for aspirational buyers".

Shriram Properties CMD Murali Malayappan said the easing of home loan rates should particularly benefit mid-market homebuyers, while Signature Global Chairman Pradeep Aggarwal said the cut in repo rate and cash reserve ratio will bring significant relief for homebuyers.

Manik Malik, CFO of BPTP, said this change in the policy rate is expected to ease borrowing costs, benefiting both developers and homebuyers.

"Developers will see financial relief through lower borrowing rates, enabling smoother project execution and keeping construction costs manageable. For homebuyers, this reduction in the repo rate translates into lower house loan EMIs, making homeownership more accessible," he said.

Bengaluru-based Sanjeevini Group Chairman Umesh Gowda HA said the RBI decision will be a big boost for the overall economy and also the housing sector.

"Home loans have already fallen below the 8 per cent mark and today's measures will further reduce home loan rates, thereby driving demand for mid-income and affordable homes," he added.

Noida-based Hawelia Group Chairman Rattan Hawelia said, "The sale of homes in NCR has witnessed a slowdown in the last couple of months. The recent reduction in repo rate after the last 2 rate cuts will definitely boost demand." Leading housing brokerage firms Anarock, Square Yards, PropTiger, The Guardians Real Estate Advisory, InvestoXpert and InfraMantra too sounded bullish about the growth prospects after this decision.

Dhruv Agarwala, Group CEO of Housing.com & PropTiger.com, said that the move is expected to lower borrowing costs and bolster business confidence.

"In housing, where affordability is critical, especially in the budget segment, a reduction in interest rates will go a long way in sustaining demand. It will also ease capital costs for developers, potentially reigniting momentum in the price-sensitive market," he said.

Anarock Chairman Anuj Puri said 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," he pointed out.

Ankur Jalan, CEO of AIF Golden Growth Fund, said the RBI move will boost consumption and drive economic growth, benefiting all sectors of Ithe ndian economy.

According to the latest RBI data, housing loan outstanding has increased to Rs 30 lakh crore as on April 18, 2025, from Rs 27.41 lakh crore year-on-year.