The real estate industry hopes that residential demand will be strengthened by decreasing the repo rate of Reserve Bank of India (RBI) to 6.25 percent. Its effect will be especially in the mid-hidden segment i.e. the middle-residential section. Real estate companies are expecting the amended income tax slab in the Union Budget and the announcement of the ‘Swami 2’ fund of Rs 15,000 crore as well as the reduction in interest rates. Industry veterans believe that rate deduction will reduce the borrowing costs for buyers. With increasing demand, the reduction in the cost of finance for developers will speed up the construction of new projects, which will benefit all stakeholders.
Venkatesh Gopalakrishnan, director of the group promoter office at Shapoorji Palonji Real Estate, said Venkatesh Gopalakrishnan, “The development is extremely good for the real estate sector, especially for affordable and mid-segment housing, in which demand is increasing rapidly.” Housing loans will be cheaper at a low borrowing cost, which will make many buyers’ dream of buying a house. This step is likely to increase investment in real estate sector again, which will help in maintaining its growth speed.
Niranjan Hiranandani, chairman of the National Real Estate Development Council and co-founder and managing director of the Hiranandani Group in Mumbai, said, “This change in policy will speed up sales with benefits by announcing in the budget of FY 2026 for the middle class. Low interest rates will motivate home buyers to buy their home with better lifestyle.
Pradeep Aggarwal, founder and chairman of NCR’s Signature Global (India), said, “After a long time, the rate cut is an important step for real estate. Historically decreased interest rates have led to a boost to improvement in residential demand, which has benefited both home buyers and developers. Improvement in loans will help developers in acquiring capital for project implementation and projects will be completed on time.
Earlier in March 2020, RBI reduced the rate from 75 basis points to 4.40 percent. In its December 2024 monetary policy review meeting, the RBI reduced the cash ratio (CRR) to 4 per cent in an attempt to increase liquidity. Girish Kausgi, managing director of PNB Housing Finance, said, “Low interest rates directly promote economy, making housing loans more accessible for homeowners and home buyers for the first time.”
According to Enarock Research, in 2024, there was an average of 13 to 30 percent increase in housing prices in the top seven Indian cities. The average prices were around Rs 8,590 per sq ft, which is an increase of 21 percent annually. Anuj Puri, chairman of the Enerock Group, believes that if inflation remains at a high level, then interest rate cuts may be less effective due to increase in property prices.