Mr Vimal Nadar, National Director & Head, Research, Colliers India
RBI has maintained the repo rate at 5.25% and continued with the neutral stance, while taking cognizance of the likely inflationary concerns arising out of prolonged West Asia crisis and consequent impact on supply chains. High crude oil prices and a depreciating Rupee have added to the downside risks across economic sectors, including real estate.
While growth remains resilient, the impact of cost pressures has started to become visible and is likely to weigh in. Overall construction costs are already on the rise led by increasing material and labour costs, which may lead to workforce inadequacy and delayed project timelines. This rise in construction cost is likely to be ultimately passed on to homebuyers in the form of higher property prices, thus affecting affordable and middle-income housing segments. However, this will depend on the intensity and duration of the ongoing global headwinds. The likelihood of a potential rise in repo rate and hence home loan interest rates cannot be fully eliminated in the next few quarters.
While homebuyers are likely to assess their income visibility more stringently before purchasing homes, developers are expected to prioritise construction material adequacy, cash flow management and project execution in the near to mid-term.
Mr Tanuj Shori, Founder & CEO, SquareYards
“For aspiring homebuyers, the RBI‘s decision to maintain the repo rate at 5.25% provides a stable environment for financial planning and reinforces confidence in long-term property purchases. With borrowing costs remaining steady, homebuyers can evaluate opportunities with greater certainty, which is particularly important for end-users and first-time buyers.
Beyond the rate decision, the measures announced to encourage greater participation by NRIs, OCIs, and foreign investors in Indian financial markets are a significant positive for the broader economy. By facilitating higher overseas investments and enhancing the attractiveness of Indian debt and equity markets, these initiatives are expected to support capital inflows, strengthen investor confidence, and reinforce India’s position as a preferred global investment destination.
For the real estate sector, stronger economic sentiment and deeper engagement from the global Indian diaspora could translate into increased interest in residential assets. NRIs already account for a meaningful share of premium housing demand, and these measures are likely to further strengthen their confidence in India’s long-term growth story. Combined with a stable interest rate environment, this should provide continued support to housing demand across key residential markets.”
Mr Akhil Saraf, Founder & CEO, Reloy (A proptech Firm)
By maintaining the policy rate steady, the RBI has indicated that the government expects the Oil Crisis to stabilise and inflation to be under check. The effect on construction costs is becoming increasingly apparent, though they remain manageable for now. This decision is a positive sign for the housing sector, where interest rate stability remains critical for affordability and buyer confidence. A prolonged period of steady borrowing costs will continue to support residential demand, particularly among first-time homebuyers and upgraders, while also providing developers with greater visibility for project planning and investments.
Mr Shrinivas Rao, FRICS, CEO, Vestian
“The Reserve Bank of India kept the repo rate steady amid evolving global uncertainties to gauge its overall impact on the Indian economy before initiating any rate-hike cycle. This decision has provided some financial relief to the real estate sector, which continues to grapple with rising construction costs driven by elevated inflation. Developers and investors also continue to benefit from unchanged borrowing costs, helping sustain healthy demand-supply dynamics in the market. However, the central bank is likely to hike repo rate in the coming months to contain inflationary pressures stemming from rising fuel prices and the prospect of a weaker monsoon.”
