The Reserve Bank of India’s decision to keep the repo rate unchanged at 5.25% has been widely welcomed by the real estate sector. Coming after the Union Budget 2026–27, which emphasized higher government spending and infrastructure-led growth, this move signals continuity in monetary policy and provides developers, investors, and homebuyers with a predictable environment for planning and decision-making.
Stable interest rates are particularly important for the real estate sector, where borrowing costs directly influence housing demand and project viability. Experts note that this measured pause reflects RBI’s careful balancing act: supporting economic growth while keeping an eye on inflation.
Stability for Interest-Sensitive Sectors
Pradeep Aggarwal, Founder and Chairman of Signature Global, highlights that “the RBI’s decision to hold the repo rate steady at 5.25% offers stability for interest-rate–sensitive sectors like real estate.” With inflation under control and previous rate cuts still benefiting homebuyers, residential demand has remained resilient. Aggarwal points out that the government’s planned public capital expenditure of ₹12.2 lakh crore in FY27, announced in the Union Budget, strengthens the growth outlook further, particularly through infrastructure-led development.
For developers and investors, this stability means that planning for new projects and investments becomes less uncertain. The continued flow of credit at predictable rates helps sustain housing demand and ensures that real estate continues to contribute meaningfully to economic growth and employment generation.
Supportive Monetary and Fiscal Environment
Sanjay Dutt, MD and CEO of TATA Realty and Infrastructure Ltd., sees the RBI’s stance as part of a broader positive economic backdrop. With a favourable growth outlook and benign inflation, the decision aligns with market expectations. Dutt notes that earlier rate cuts have already softened borrowing costs, though full transmission to home loan rates is ongoing.
He also points out that regulatory changes, including finalized ECB norms and the move to allow banks to lend to REITs, create additional financing avenues for developers. These measures, combined with soft interest rates and a stable monetary policy, provide long-term positives for the real estate sector, boosting both investment and development activities.
Predictability for Developers and Investors
Anshuman Magazine, Chairman and CEO of CBRE India, emphasizes the importance of predictability in policy. “The MPC’s decision to hold the repo rate provides both stability and predictability for the real estate sector,” he says. Stable rates, coupled with low inflation and progress in trade agreements such as India-US, are expected to support organic growth and long-term visibility for developers and investors.
This policy predictability also reassures the market that borrowing costs will not fluctuate sharply, allowing developers to plan projects with confidence and helping investors gauge returns with more certainty.
Opportunities for Affordable Housing
While the rate decision offers stability, some experts see room for further easing to stimulate demand in certain segments. Shishir Baijal, Chairman and MD of Knight Frank India, suggests a possible 25-basis-point rate cut in future MPC meetings, citing moderate inflation, comfortable forex reserves, and improving trade dynamics.
Such a cut could particularly benefit lower-value housing segments, where affordability is sensitive to interest rates. Lower borrowing costs would expand homebuyers’ purchasing capacity, potentially revitalizing demand among first-time and middle-income buyers.
Predictable Borrowing Costs for Homebuyers
Anuj Puri, Chairman of ANAROCK Group, notes that maintaining the repo rate keeps home loan EMIs steady, providing predictability for buyers. While this supports engagement, he argues that it does not directly enhance affordability or stimulate demand in the short term.
Affordable housing continues to face challenges, with its share of total sales declining from 20% in 2024 to around 18% in 2025. Puri emphasizes the need for high-impact measures such as tax incentives for developers and buyers to restore focus on this segment. On the positive side, regulatory changes enabling banks to lend to REITs reduce capital costs and facilitate growth in office and retail segments.
Liquidity and Infrastructure Development
Dr. Amit Goenka, Founder and MD of Nisus Finance, underlines the RBI’s commitment to macro stability and pre-emptive liquidity management. For sectors with long gestation periods, such as infrastructure, predictable funding conditions are as critical as borrowing costs.
A calibrated liquidity strategy ensures the free flow of credit, promoting capital deployment for infrastructure projects and strengthening balance sheets across the ecosystem. By providing stability and predictability, the RBI enables developers and alternative financing platforms to plan and execute large-scale projects that are vital to India’s growth trajectory.
Balancing Growth and Inflation
Dr. Samantak Das, Chief Economist at JLL India, highlights the alignment between monetary and fiscal measures. “The RBI’s decision to maintain the repo rate at 5.25% reflects a measured pause-and-watch strategy,” he says. By balancing inflation management with economic expansion, the central bank preserves borrowing cost stability, supporting consumer spending, housing demand, and business investment.
Das also notes that previous rate cuts’ transmission into home loan rates will continue to influence the market, with the potential to revive housing sales in 2026. Accelerated GDP growth, moderating housing price appreciation, and a stable policy stance create favorable conditions for the sector.
Boosting Tier 2 and Tier 3 Cities
Parveen Jain, President of NAREDCO, points out that stable interest rates encourage homebuyers to make decisions and motivate developers to launch new projects. With the government emphasizing development in cities with populations of five lakh and above, predictable borrowing costs can significantly boost real estate growth in Tier 2 and Tier 3 cities.
Stability in interest rates supports housing demand beyond metropolitan hubs, allowing real estate activity to spread more evenly across the country while sustaining economic growth.
Global Considerations and Economic Confidence
Shrinivas Rao, CEO of Vestian, notes that maintaining the repo rate at a three-year low provides stability amid global uncertainties. Coupled with controlled inflation and robust economic growth, this decision strengthens confidence in the real estate market and broader economy.
Low mortgage rates continue to support demand, while affordable financing for developers and foreign capital inflows are expected to accelerate construction activity nationwide. These factors help narrow the demand-supply gap, particularly in growing urban centers, and reinforce India’s position as an attractive market for real estate investment.
Stability and Predictability in Focus
The RBI’s decision to maintain the repo rate at 5.25% offers much-needed stability for a sector where borrowing costs directly impact demand, investment, and project execution. While affordability pressures in the mid and lower segments remain, stable rates, regulatory reforms, and government-led infrastructure initiatives collectively create a supportive environment for developers, investors, and homebuyers alike.
Looking ahead, the real estate sector can expect continuity in financing conditions, providing predictability that enables developers to plan launches effectively, investors to assess returns confidently, and homebuyers to make informed decisions. As India’s economy continues to expand, stable monetary policy will remain a cornerstone for sustained real estate growth and long-term economic confidence.
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