Business News

RBI's 50 bps rate cut sparks optimism across real estate sector - ET RealEstate

NEW DELHI: The Reserve Bank of India (RBI) on Friday slashed the repo rate by 50 basis points to 5.5%, the lowest level in three years. This marks the third consecutive rate cut in 2025, bringing the cumulative reduction to 100 basis points since February. Alongside the rate cut, the central bank also reduced the cash reserve ratio (CRR) by 100 bps, unlocking ₹2.5 lakh crore worth of liquidity in the system. Sanjay Malhotra, governor, RBI said the monetary policy committee (MPC) took the decision after a comprehensive review of macroeconomic indicators and financial developments. The central bank aims to cushion the impact of global headwinds and propel India's growth, which has slipped to a four-year low of 6.5% in FY25. Real estate stakeholders' welcome RBI's proactive stance Niranjan Hiranandani, chairman, NAREDCO & Hiranandani Group, called the move "a pivotal intervention" that reinforces India's growth narrative. "The rate cut and liquidity infusion are set to bolster credit lending and catalyze capex. Lower mortgage rates will boost homebuyer affordability and drive demand, particularly in Grade A developments," he noted. Echoing optimism, G Hari Babu, national president, NAREDCO, said, "This is a timely and welcome step. Lower borrowing costs will improve affordability for first-time buyers and ease financing for developers. It will lift market sentiment and create a ripple effect across allied sectors." The 50 bps cut also signals a calibrated policy shift. Prashant Sharma, president of NAREDCO Maharashtra, emphasized that the RBI's neutral stance and consistent cuts signal a commitment to growth, instilling confidence among both developers and investors. "It could be the key to reviving demand across housing segments," he said. On the buyer side, market confidence may be turning a corner. Domnic Romell, president of CREDAI-MCHI, highlighted the direct benefits for those in the affordable category. "A ₹15-20 lakh loan now sees EMIs fall by ₹700-1,000 per month -- this is significant for cost-sensitive homebuyers and could be the nudge many were waiting for," he observed. Developers, too, see the opportunity to ramp up. Murali Malayappan, CMD of Shriram Properties, said the CRR cut -- unlocking ₹2.5 lakh crore in liquidity -- combined with falling rates will strengthen capital flows and project execution. "We're in a position to pass on these savings and accelerate demand-led growth," he said. For many, the benefit lies in broadening access to housing. Dhaval Ajmera, secretary of CREDAI-MCHI, noted that the cut would "improve loan eligibility and affordability for lower-income households," unlocking latent demand in the affordable housing segment, which he termed the "backbone of India's residential market." The mid- and premium segments are also expected to see a lift. Kamal Khetan, CMD of Sunteck Realty, said reduced EMIs would make aspirational housing more viable, while stronger banking liquidity could help developers execute projects faster. "It's a dual win for buyers and builders," he added. Here's how other industry stakeholders reacted to RBI's repo rate cut Tribhuwan Adhikari, MD & CEO of LIC Housing Finance said, "These progressive steps along with the inflation easing and the growth forecast remaining steady at 6.5%, the rate cut is expected to significantly lower borrowing costs, thereby improving affordability for homebuyers across segments. The monetary policy is becoming more balanced and forward-looking. This move by the RBI will likely catalyse a surge in home loan demand, especially the affordable housing segment. We expect a good boost in the housing demand July onwards, and are optimistic that this year will be good for the housing finance industry." Anshuman Magazine, chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE said, "RBI's decision to cut the repo rate by 50 basis points is a significant move that will have a positive impact on the economy and various sectors, including real estate. This reduction is expected to lead to lower borrowing costs, increased liquidity, and enhanced consumer spending power. For the real estate sector, this move is particularly beneficial as it will make home loans more affordable, stimulating demand and driving growth. The reduced interest rates will also encourage developers to take on new projects, boosting construction activity and creating employment opportunities." Shishir Baijal, chairman and managing director, Knight Frank India, said, "Over the last few years, the strong housing market momentum was increasingly concentrating in the premium end even as there were signals of weakening the lower segments. 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. Liquidity conditions remain balanced and conducive to supporting this monetary stance and we hope to see a greater transmission of this rate cycle." 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. Over the medium term, the reduction in the cost of capital is also expected to enhance investor confidence, potentially boosting activity in both residential and commercial real estate segments." Rakesh Reddy, director, Aparna Constructions said, "While repo rate standing below 6% after many years is a moment of celebration, it is crucial to monitor and facilitate the effective transmission of these benefits to both consumers and developers on time, as inadequate policy transmission in the past has often diluted the intended impact of such rate cuts. We also feel that there is a need to return to the range of 5% as it has the potential to unlock a new wave of homeownership, driving broader economic participation and market growth." Rohit Gera, managing director Gera Developments said, Together, these measures are designed to accelerate monetary policy transmission and bring down lending rates across the board. This reflects the central bank's aim to bolster domestic economic growth and shared prosperity amid global uncertainties. For the real estate sector, this move could be a catalyst: lower borrowing costs will translate into reduced EMIs and improved homebuyer sentiment. Hopefully, banks actively and rapidly pass on the cut to home buyers. The policy stance clearly aims to revive private investment and consumption." Aman Sarin, director & chief executive officer, Anant Raj said, "We believe this will have a positive impact on the real estate sector, particularly the mid- and high-end segments, as interest rates become more affordable, reduced EMI and loan eligibility improves." Anurag Mathur, CEO, Savills India said, "The rate cut is a much-needed relief for homebuyers in the situation of dipping housing sales recently, especially in the affordable segment. The rate cut will lead to reduced borrowing costs that would encourage credit flow by making home loans more affordable, thereby improving housing affordability and stimulating end-user demand. The accommodation environment is also likely to attract investor interest, potentially driving momentum in both residential and commercial real estate markets. Additionally, reduced borrowing costs will likely accelerate construction and infrastructure development, further reinforcing sectoral growth while supporting employment generation. Developers would benefit from eased financial burdens, which could lead to an acceleration in new construction projects, thereby enhancing new launches." Venkatesh Gopalakrishnan, MD - Shapoorji Pallonji Real Estate said, "This bold and proactive step underscores the central bank's commitment to stimulating economic growth and maintaining adequate liquidity in the system. A lower repo rate directly results in reduced EMIs, thereby enhancing home loan affordability for potential homebuyers. This move is especially encouraging for the real estate sector, particularly in the affordable and mid-income housing segments, where demand is highly sensitive to interest rate changes. 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." Piyush Bothra, co-founder and CFO, Square Yards said, "For the real estate sector, which has already been witnessing mellowed growth -- this move is the right dosage which was required to unleash the animal spirits. 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." Dhruv Agarwala, group CEO, Housing & Proptiger said, "The RBI's 50 basis point rate cut in today's MPC meeting reflects a timely and well-calibrated response to the prevailing macroeconomic environment -- marked by contained inflation and stable liquidity. It reinforces the central bank's commitment to supporting growth amid ongoing global headwinds. The move is expected to lower borrowing costs, bolster business confidence, and provide much-needed relief to sectors under pressure. 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 price-sensitive markets." Nesara BS, chairman, Concorde said, "While the influx of liquidity will aid credit growth and capex expansion, the resulting lowering of home loan interest rates from the REPO rate cut will come as a further benefit to home buyers. This move could also have a positive impact on India's GDP suggesting growth from 6.5% to 7%." Samyak Jain, director, Siddha Group said, "This will significantly improve consumer sentiment and reduce the cost of borrowing, thereby accelerating housing demand, especially in mid-income and affordable segments. We appreciate the RBI's continued efforts to balance inflation control with the need to maintain economic momentum amidst global uncertainties." Shrinivas Rao, FRICS, CEO, Vestian said, "Hence, the central bank has changed its stance from 'Accommodative' to 'Neutral' to carefully observe the global scenario and act accordingly. Major commercial banks are expected to pass on this benefit to homebuyers and developers by lowering interest rates, stimulating real estate demand and investments." Prateek Tiwari, MD, Prateek Group said, "The move will inject greater confidence in the already booming housing segment, as lower interest rates will significantly reduce the cost of borrowing. This, in turn, will encourage developers to come up with new launches, sustaining the market's growth. Hence, the sector is all set to reap its benefits." Mayank Jain, CEO, KREEVA said, "The reduced borrowing cost will not only strengthen homebuyers' sentiments but also help in easing the liquidity flow in the market. In light of significant market volatility and real estate witnessing a surge in the investment flow, this proactive approach signals the central bank's strong commitment to thrust economic momentum and boost investor confidence."

Latest Stories

Read Full Story