Real Estate Sector Remains Resilient Despite 25-Bps Repo Rate Hike; Experts Expect Limited Near-Term Impact on Demand
The Reserve Bank of India’s decision to raise the repo rate by 25 basis points from 5.25% to 5.50% is expected to have a measured impact on the real estate sector, with industry leaders anticipating a marginal increase in borrowing costs but no significant disruption to underlying demand. While higher lending rates could make some homebuyers more cautious, experts believe strong end-user demand, urbanisation, rising incomes, infrastructure development and continued preference for home ownership will provide resilience. Developers are likely to place greater emphasis on financial discipline, project execution and value-driven offerings, while buyers may increasingly assess affordability, quality and long-term value before making purchase decisions.
Ashish Bhutani, CEO, Bhutani Infra said, “A 25-basis-point increase in the repo rate from 5.25% to 5.50% may create some near-term pressure on the real estate sector by marginally increasing borrowing costs for both homebuyers and developers. While higher home-loan rates could make some buyers more cautious in the immediate term, we do not expect a moderate rate increase to materially alter the broader housing demand story.”
Real estate continues to be supported by rising incomes, urbanisation, infrastructure development and a strong preference for home ownership. For developers, higher rates will reinforce the importance of financial discipline, timely execution and focusing on projects backed by genuine end-user demand.
The key going forward will be maintaining a balance between inflation management and economic growth. A stable and predictable interest-rate environment will help sustain consumer confidence, encourage long-term investment and support the continued growth of India’s real estate sector.
Amit Porwal, Director Aranyakaa Farms said, “The RBI MPC’s decision to raise the repo rate by 25 basis points to 5.50% comes at a time when the real estate sector is witnessing sustained demand across residential and commercial segments. While the rate hike could lead to a marginal increase in borrowing costs, the impact is likely to remain manageable in the near term. The sector’s fundamentals continue to be supported by urbanisation, improving consumer confidence and steady end-user demand. We believe a calibrated monetary policy approach will help maintain a balance between inflation management and economic growth.”
Raghunath Reddy Bhattagiri, Founder Triguna Projects said, “A 25-basis-point increase in the repo rate to 5.50% reflects the MPC’s cautious approach towards maintaining macroeconomic stability. For real estate, higher interest rates may have some impact on home-loan affordability and buyer sentiment, particularly among price-sensitive consumers. However, the sector has demonstrated resilience and maturity, and genuine end-user demand is expected to remain steady. Developers are likely to remain focused on disciplined expansion, while buyers may increasingly prioritise value, quality and projects with strong fundamentals. Overall, we expect the real estate market to absorb this modest adjustment without any major disruption.”
HS Kandhari, Co-founder & Executive Director, Harmony Infra, “The 25-basis-point repo rate hike will add to borrowing costs as lenders revise their rates, with buyers on tighter budgets likely to feel the impact more. In luxury housing, I expect the immediate effect on demand to be limited, as purchases are also shaped by lifestyle needs, financial strength and long-term ownership plans. Buyers taking sizeable home loans may review their financing costs, while the prospect of further rate hikes could lead some to take longer to decide. This increase alone is unlikely to cause a sharp change in demand, but the future direction of rates will matter. Buyers will continue to weigh the quality of the home, its value and the developer’s delivery record.”
Vikas Garg, Joint Managing Director, Ganga Realty said, “The RBI’s decision to raise the repo rate by 25 basis points to 5.50% comes at a time when the Indian economy continues to demonstrate resilience and the real estate sector is entering its crucial festive season. While the rate movement may have a marginal near-term impact on borrowing costs, we believe the underlying fundamentals of residential real estate remain strong. Homebuyers today are increasingly looking at housing as a long-term investment, supported by improving infrastructure, rising incomes and growing aspirations for better homes. The festive period traditionally brings renewed buying activity, and we expect this momentum to remain healthy, particularly across well-established markets such as Gurugram. Developers will continue to focus on offering value-driven propositions and attractive schemes that support buyer decisions. Overall, we remain optimistic about the sector and expect end-user demand to remain resilient through the festive season and beyond.”