Rate cut to significantly boost homebuyer sentiment: Property consultants

In line with expectations, the RBI in its first MPC meeting after the Budget on Friday decided to reduce the repo rate by 25 basis points to 6.25%, the first rate cut in nearly five years, following a prolonged cycle of rate hike and stability triggered by global uncertainties. This came in the backdrop of easing inflation and moderation in growth prospects.

The Central Bank, however, maintained confidence on the robustness of domestic economy and projected the GDP growth rate at 6.7% in FY 2025-26.

Welcoming the rate cut, realty experts and consultants said as housing demand had begun to stabilize after witnessing record sales in the last 2-3 years, this rate cut comes at an opportune time and will have a significant bearing on boosting homebuyer sentiments.

“The rate cut along with the recent budgetary announcements related to creation of Urban Challenge Fund and tax reliefs under the new regime are likely to stimulate urban growth and enhance domestic consumption. Higher disposable income and lowering of financing costs stand to benefit homebuyers and developers alike. Furthermore, the recent allocation of Rs 15,000 crore for SWAMIH II fund is likely to expedite completion of stressed projects, boosting liquidity and spur home buying sentiments. Overall, evident tailwinds should boost real estate demand across asset classes in the upcoming quarters,” said Vimal Nadar, Head of Research at Colliers India.

Also Read: RBI Cuts Repo Rate by 25 bps: What should homebuyers do now?

Dhruv Agarwala, Group CEO, Housing.com & Proptiger.com, said the reduction in the key policy rate will lower home loan interest rates, benefiting both prospective buyers and existing borrowers.

“At this critical juncture, in fact, the rate cut will play a crucial role in improving housing affordability in the world’s most populous country, complementing the measures announced in the recently-unveiled Union Budget 2025. Additionally, the repo rate cut, along with the previously-announced reduction in the CRR, will enhance liquidity for developers, positively impacting new supply and accelerating project completions,” he added.

Property consultants said the RBI decision to reduce the repo rate is undeniably a major boost to the homebuyers, particularly for affordable housing buyers.

“Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce – as long as banks pass on the key benefits to buyers. This dovetails well with recent trends in the housing market, which continues to see strong momentum. Reduced home loan rates can help the overall positive consumer sentiment. Given that housing prices have risen across the top 7 cities in the last one year, this breather is welcome and timely,” said Anuj Puri, Chairman, ANAROCK Group.

As per ANAROCK Research, 2024 saw average housing prices rise by anywhere between 13% and 30% in the top 7 cities, with NCR recording the highest 30% jump. The average prices in top 7 cities collectively stood at approx. INR 7,080 per sq. ft. in 2023-end, while in 2024-end it increased to approx. INR 8,590 per sq. ft. – a collective increase of 21% annually.

Commercial real estate, especially office spaces, can also benefit from lower borrowing costs for businesses, and lower rates also make REITs more appealing since investors look for stable returns in a falling interest rate environment.

Aditya Kushwaha, CEO, Axis Ecorp, said the RBI decision to cut the repo rate signals a strategic move to stimulate economic growth while maintaining stability. This comes at a time when REITs, fractional ownership, and other innovative investment avenues have reignited investor interest in quality real estate.

“With luxury real estate continuing to thrive, driven by strong domestic demand and rising NRI investments, lower interest rates will further enhance affordability and confidence in the sector. This shift is also expected to encourage long-term capital inflows, strengthening forex reserves and reinforcing India’s position as a resilient and attractive market. As the investment landscape evolves, this policy change provides a timely boost, ensuring sustained momentum in the premium real estate segment,” Kushwaha added.

“With inflation well within control and fiscal policies in the FY26 budget offering significant relief to the middle class, this rate cut is set to accelerate economic momentum. A lower cost of borrowing will not only enhance homebuyers’ affordability but also stimulate demand across residential, commercial, and retail segments. As a result, we anticipate a surge in new project launches, strengthening the supply pipeline and further driving growth in the real estate sector,” said Mohit Goel, Managing Director, Omaxe Ltd.

N.K. Gupta, Chairman of Manglam Group, said, “Lower interest rates, combined with fiscal incentives, will not only accelerate housing demand—particularly in the mid-income and affordable segments—but also catalyze infrastructure development and hospitality growth. With tier 2 and 3 cities witnessing unprecedented expansion, this policy shift will further fuel real estate momentum, making homeownership more accessible while driving commercial investments. As liquidity improves and borrowing costs ease, we anticipate a stronger uptick in both residential and mixed-use developments, reinforcing India’s urbanization wave.”

Udit Jain, Director, OneGroup, said, “Given that these housing segments are highly cost-sensitive, a lower EMI burden will undoubtedly encourage more buyers to take the plunge into homeownership. Additionally, the rate cut is expected to provide a strong boost to housing demand in Tier II and Tier III cities, where affordability plays a crucial role in purchasing decisions. Combined with other favorable factors—such as increased savings from revised tax slabs in Budget 2025-26 and the upcoming implementation of the 8th Pay Commission—this move sets the stage for sustained growth in the real estate sector.”

The combined impact of these measures will give a much-needed boost to industries linked to housing, enhance home loan eligibility, improve affordability, and drive higher demand for housing in the near future.