No rate cut by RBI; Developers pin hopes on festive demand to sustain housing momentum

Following the aggressive 50 bps rate cut in June, which brought the repo rate down to 5.50%, the RBI kept the repo rate unchanged in its August MPC meet on Wednesday. The stance was also kept unchanged at ‘neutral’, signalling that there remains limited room for future rate cuts in near run.

Commenting on the RBI decision to keep the policy rate unchanged, Anuj Puri, Chairman, ANAROCK Group, said, “The RBI has decided to keep the repo rates unchanged at 5.5%, also taking cognizance of the ongoing tariff uncertainties and the possible impact on the Indian economy. A rate cut leading to lower interest rate environment would have particularly boosted the affordable housing segment, which has been under considerable pressure in recent years.”

ANAROCK data shows that average residential prices across the top 7 cities combined have increased by 39% in the last two years alone – from INR 6,470 per sq. ft. as of Q2 2023 to INR 8,990 per sq. ft. as of Q2 2025. The affordable housing segment’s fate may be further dampened by the ongoing global trade tensions and tariffs imposed by the Trump administration. This is largely because of its impact on the MSMEs – the key target audience of the affordable segment.

“Overall, homebuyers are currently driven by long-term confidence rather than short-term rate fluctuations. Given the upcoming festive season, developers may look to keep the market momentum going with offers and flexible payment plans, which may help improve affordability for many genuine buyers,” Puri said.

Here’s what India’s leading real estate consultants and developers said about the RBI decision to keep the repo rate unchanged:

Anurag Mathur, CEO, Savills India: “For the real estate sector, policy continuity offers a stable operating environment. Steady home loan rates are supporting end-user activity, particularly in the mid and premium segments, while luxury housing continues to witness demand from aspirational buyers. Developers stand to benefit from enhanced funding visibility, though elevated input costs remain a concern. The festive season, traditionally a high-sales period, is expected to further uplift housing market sentiment.”

Vimal Nadar, National Director and Head of Research, Colliers India: “Stability in monetary policy augurs well for homebuyers and real estate developers, particularly in the affordable and mid-income segments. The lowering of interest rates in the recent past is expected to be fully passed on to the end users in upcoming quarters, who are likely to benefit from reduced financing costs. With the festive season approaching, developers can further capitalize on this momentum with timely project completions, new launches and festive offers & discounts. “Overall, the cautious yet growth-supportive monetary policy is likely to strengthen demand across real estate segments in the second half of 2025.”

Shishir Baijal, Chairman and Managing Director, Knight Frank India: “For the real estate sector, the continuation of stable policy rates and surplus liquidity conditions provide much-needed predictability and helps preserve affordability for homebuyers. Notably, some banks have already reduced consumer home loan rates – a move that supports housing demand, especially in the mid-income and low-income segment – and more transmission in interest rates is underway. This policy continuity, coupled with easing credit conditions and steady economic growth can provide a boost to the affordable housing categories.”

Amit Goyal, MD, India Sotheby’s International Realty: “The RBI’s neutral policy stance, coupled with a 6.5% GDP growth outlook and a softer inflation trajectory, reflects a steady macroeconomic confidence. Strong consumption and stable urban demand are already supporting India’s housing sentiment. With home loan rates easing with 3 previous repo rate cuts in 2025, we believe the momentum in home buying will remain cautiously positive—much like the RBI’s approach, balancing domestic resilience with global uncertainties.”

Piyush Bothra, Co-Founder and CFO, Square Yards: “The decision to maintain the repo rate at its current level reflects a ‘watchful waiting’ approach amidst a mixed economic landscape. For the residential sector, a further cut would have been a welcome festive bonus for homebuyers. This stability ensures that borrowing costs remain manageable and avoids any sudden shocks to the market. The onus now squarely falls on the banks to enhance the transmission of previous rate cuts, ensuring that the benefits of lower interest rates are fully passed on to homebuyers.”

Niranjan Hiranandani, Chairman, NAREDCO & Hiranandani Group: “Stability in interest rates offers clarity for both developers and homebuyers, enabling structured planning and decision-making. A pause in further rate cuts also allows banks to ensure the complete transmission of the previous 100 bps reduction, a critical step in providing tangible relief to end consumers. This full transmission will enhance home loan affordability, supporting sustained housing demand. While the stable monetary approach reinforces confidence, a marginal rate cut at this juncture could have further reduced borrowing costs, adding fresh momentum to residential sales amidst strong buyer and investor sentiment. Such a move could have amplified the sector’s contribution to economic recovery.”

Parvinder Singh, CEO, Trident Realty: “A stable interest rate environment gives homebuyers the confidence to prepare for the future, while allowing developers like us to focus on long-term, value-driven projects. It reflects a broader trust in the resilience of the Indian economy and supports a healthy investment environment. This not only positively impacts the sentiment in the housing market, but it also reinforces our focus to building sustainable, future-ready developments that cater to the constantly evolving demands of today’s homebuyers and communities.” 

Ashish Agarwal, Director, AU Real Estate: “Stable interest rates play a vital role in enhancing the affordability and accessibility of homeownership. As financing becomes more accessible, we anticipate a growing demand for luxury housing, driven by buyers seeking homes that truly embody their personal aspirations. This environment not only strengthens buyer confidence but also empowers us to continue delivering exceptional, high-quality living spaces within the luxury segment.” 

Avneesh Sood, Director, Eros Group: “For the real estate sector, this stable policy environment is crucial. Lending rates are softening, especially in the mid and premium housing segments, which is already encouraging fresh buyer interest. Developers too are finding more headroom for project planning and funding. With global uncertainties, tariff risks, and uneven industrial growth, a neutral stance provides predictability and cushions sentiment. Rural consumption remains resilient, and public capex is driving infrastructure momentum. This combination, if sustained, can lay the groundwork for a stronger and broader-based real estate recovery in the coming quarters.”

Aman Trehan, Executive Director, Trehan Iris: “This move ensures market stability, supports high-value investments, and boosts confidence. With the FY26 GDP growth forecast retained at 6.5%, we expect strong momentum and accelerated growth in the real estate sector.”

Santosh Agarwal, CFO & Executive Director, Alpha Corp Development Limited: “Stable borrowing costs will improve homebuyer affordability by keeping EMIs under control and allow developers to optimise capital for large-scale and ongoing projects. This monetary stability is expected to accelerate purchase decisions in price-sensitive segments, enhance liquidity, and strengthen market sentiment. We foresee this move supporting sustained demand across both residential and commercial real estate, driving long-term growth and reinforcing the sector’s overall stability.”

Ashish Sharma, AVP Operations, Brahma Group: “This monetary stability is poised to boost buyer confidence, spur activity in price-sensitive markets, and strengthen liquidity. We anticipate sustained demand across residential and commercial segments, driving long-term growth and reinforcing the overall stability of the real estate ecosystem.”

Aman Sharma, Founder and Managing Director of Aarize Group: “For the real estate sector, this steady stance supports stability in borrowing costs and helps maintain positive buyer sentiment. We believe this consistency offers the right environment for long-term planning and investment, encouraging sustained growth across residential and commercial developments, while aligning with the broader economic recovery and infrastructure-led development goals.”

Mohit Goel, Managing Director, Omaxe Ltd: “While affordability remains a key factor for homebuyers, especially in emerging cities, sustained policy consistency allows both developers and consumers to plan with greater confidence. We’re seeing strong traction in Tier-2 markets, where infrastructure growth and improving connectivity are translating into real demand. The current rate environment is well-aligned with the momentum we’re witnessing across these regions and expecting this to rise specially during the festive season.”

Amrita Gupta, Director, Manglam Group: “By maintaining the repo rate, the RBI has sent a reassuring signal to both buyers and developers. Festive quarters are a high-conversion period for residential sales, and stable interest rates help buyers make faster purchase decisions. After a phase of easing, this pause gives the market a chance to consolidate and absorb the gains. In Tier 2 and Tier 3 cities in particular — where rate sensitivity is higher — this decision will support sustained traction. We see it as a positive step in maintaining momentum without creating sudden shifts in buyer sentiment.”

Aditya Kushwaha, CEO and Director Axis Ecorp: We’re seeing heightened interest from both domestic buyers and NRIs, particularly in the holiday home segment where lifestyle aspirations are meeting sound investment logic. Fractional ownership, in particular, is gaining traction as it allows access to premium properties with a lower capital outlay. The steady rate environment reinforces buyer confidence and supports long-term planning in emerging markets like Goa.”

Ramani Sastri, Chairman and MD, Sterling Developers: “The residential real estate sector has adapted to the prevailing interest rate environment and continues to show robust performance. The growth trajectory of the realty sector remains positive, and more and more people are investing in the mid, premium, and luxury segment. The housing sector has already been benefiting from the cumulative 100 bps cut in the repo rate, as reflected in the rising consumer demand driven by lower home loan interest rates. As the festive season approaches, we were looking for a rate cut which would have definitely boosted affordability further and investments in the real estate sector as stability in interest rates provides confidence to both homebuyers and developers. However, the decision to maintain status quo will keep the ongoing residential real estate sales momentum on course, offering homebuyers assurance of steady loan terms.”

Sandeep Ahuja, Global CEO, Atmosphere Living: “The move by RBI to keep the repo rate at 5.50% will offer a stability in the dynamic economic environment. This kind of continuation holds true to the long-term growth trend of the real estate sector, especially within the markets that require elaborate planning like the upper-level housing, branded residential and the serviced apartments.”

Yashank Wason, Managing Director, Royal Green Realty: “By ensuring predictable borrowing costs, the RBI move bolsters consumer confidence, particularly among home loan borrowers who have already gained from earlier rate reductions. With retail inflation easing to a six-year low of 2.1% and GDP growth holding strong at 7.4%, the RBI’s pause reflects confidence in India’s economic fundamentals. This stable interest rate environment is expected to sustain property demand, creating favorable conditions for both buyers and developers.”

Abhay Kumar Mishra, President & CEO, Jindal Realty: “Following the significant rate cuts earlier this year, this pause allows the benefits of those reductions to fully pass on to homebuyers. This stability provides a predictable environment, which is crucial for consumer confidence and investment planning. Home loan interest rates are likely to remain stable, encouraging continued demand. We anticipate this will sustain the positive momentum in the housing market, supporting both prospective buyers and developers.”