In a significant move widely anticipated by several market watchers across the country, the Reserve Bank of India (RBI) has opted to maintain the repo rate at 5.5%, following a cumulative 100 basis points reduction over the past three Monetary Policy Committee (MPC) meetings earlier this year. This pause is seen as a strategic decision to reinforce economic stability, keeping home loan EMIs unchanged and bolstering confidence among the end-users in the housing market.
The central bank’s stance comes at a time when inflation is showing signs of moderation and GDP growth is projected at 6.5%. While the policy announcement has drawn mixed reactions, the sentiment within the real estate industry remains broadly positive. The decision is viewed as a measure that supports affordability and predictability: two critical factors driving housing demand, particularly in the mid-income segments.
Repo Rate Stability Boosts Buyer Confidence
The recent cycle of interest rate cuts is likely to be fully transmitted to borrowers in the coming quarters, resulting in reduced financing costs. This, paired with a steady rate environment, creates a favorable chance for homebuyers, particularly as the festive season approaches. Developers are expected to capitalize on the current sentiment by completing projects on time, launching new products, and offering seasonal discounts to attract potential buyers.
Many industry experts also believe that the transmission of the earlier rate reduction is still going on. While several financial institutions have already decreased home loan interest rates, further modifications are expected. The effectiveness of this policy environment is heavily reliant on lenders passing on the benefits to end users in a timely way, ensuring that decreased borrowing costs result in meaningful rewards for homeowners.
The RBI’s neutral policy stance, supported by steady urban demand and robust consumption trends, has instilled confidence in the housing market. This continuity in policy direction is expected to sustain buyer sentiment, which is essential for the long-term health of the real estate sector.
Moderate Growth Outlook
Current market conditions indicate that homebuying activity will remain cautiously positive, reflecting the RBI’s balanced approach to handling domestic economic resilience amid global uncertainty. Developers are expected to keep their focus on building projects in growing corridors, where demand has remained strong despite changing market sentiments.
While another rate drop could have boosted first-time homebuyers and end-user participation, the existing stable environment is conducive to long-term growth. The stable interest rate provides a solid foundation for consistent demand and planned growth in both the residential and commercial sectors.
Market Trends and Sales Performance
Despite the overall positive sentiment, new data shows that home activity has slowed down. Sales in India’s top nine cities recorded a 17% year-on-year decline in H1 2025, with approximately 2.08 lakh units sold. The overall sales value fell by around 10% to ₹2.94 lakh crore, while new launches dropped by 18% to 1.99 lakh units during the same period.
However, this decline is not viewed as an immediate cause for concern. Stable policy rates are expected to help sustain buyer confidence and prevent sharp market corrections. Over time, this stability can provide the sector with the necessary grounding to regain momentum.
As the festive season is round the corner, experts are anticipating that developers will strategically leverage this period to drive sales. Project completions, targeted marketing campaigns, and attractive festive offers are likely to play a key role in maintaining transaction activity in the Indian realty sector.
Bottom Line
For the real estate sector, this policy stability offers a strong foundation for sustained growth in the second half of 2025. By ensuring effective transmission of previous rate cuts and maintaining affordability, the sector is well-positioned to navigate current challenges while capitalizing on emerging opportunities in the months ahead.
