RBI Keeps Repo Rate At 5.25%, Realtors Cheer Stability But Flag Affordability Gap

The Reserve Bank of India's Monetary Policy Committee kept the benchmark repo rate unchanged at 5.25%, in line with market expectations, and retained its "neutral" policy stance.

The six member committee, which met between August 3 and 5, voted unanimously to hold the rate. With the repo rate unchanged, the Standing Deposit Facility rate stays at 5%, while the Marginal Standing Facility rate and the Bank Rate remain at 5.5%.

Real Estate Sector Flags Affordability Concerns

The rate hold drew swift reactions from India's real estate and workspace industry leaders. Most experts described the rate hold as a stabilising move for developers and homebuyers, though views differed on how far it would go in boosting housing demand.

Ramani Sastri, Chairman and Managing Director of Sterling Developers, welcomed the RBI's supportive stance, saying it comes "at a time when businesses are cautiously optimistic about expansion." He said a stable interest rate regime gives developers greater predictability in funding, allowing for smoother project execution while enabling homebuyers to plan long term with stable EMIs.

Manas Mehrotra, Founder of 315Work Avenue, said the decision supports a balanced environment for real estate and helps maintain demand traction. He said stable borrowing conditions are important for startups, small and medium enterprises, and larger companies, all of which are key demand drivers for the flexible workspace sector, and that continued stability is expected to drive stronger demand from global capability centres and corporates seeking flexible office solutions.

Vimal Nadar, National Director and Head of Research at Colliers India, said the unchanged rate and neutral stance reflect "a vigilant approach amid the resurgence of West Asia crisis, volatile crude prices, fluctuating rupee and persistent inflationary risks."

He said Indian real estate "holds potential to navigate the downside risks successfully," and that stable interest rates continue to offer comfort to homebuyers, particularly in the affordable and middle income segments. With the festive season approaching, Nadar said stable EMIs could boost housing demand over the next few quarters, though rising construction and labour costs may moderate sales compared to the previous year.

He added that developers are likely to focus on cost management and timely deliveries, and noted that a recent RERA advisory granting a four month extension to projects affected by the West Asia conflict offers regulatory relief to developers.

Shrinivas Rao, CEO of Vestian, said the decision "depicts its balanced approach amid prevailing geopolitical uncertainty, an uneven monsoon, and rising domestic inflation." He said the stable policy is expected to support capital inflows into real estate at a time when developers face elevated construction costs and softer foreign investment sentiment linked to the West Asia conflict, and added that the RBI could consider a rate hike at its next meeting if crude oil prices and inflationary pressures intensify.

Anuj Puri, Chairman of ANAROCK Group, offered a more cautious view, saying the steady rate was "a welcome signal of stability amid the ongoing macroeconomic uncertainty, but it is not enough to reignite the mass market housing cycle."

He cited ANAROCK data showing total housing sales in the top seven cities fell 6% year on year to about 90,715 units in the second quarter of 2026, while affordable housing supply had dropped to just 6% of total launches even as overall new supply rose 7% year on year to about 1.06 lakh units. Puri said this mismatch was "the main area of concern," noting that affordable housing demand remains rate sensitive and that residential prices are still growing at 7% annually across top cities.

RBI Governor Sees Rising Global Uncertainty

Announcing the decision, RBI Governor Sanjay Malhotra said the committee took the call after assessing domestic economic conditions alongside developments in the global economy. He pointed to rising uncertainty caused by the ongoing conflict in West Asia, which he said has disrupted trade routes and supply chains, increased market volatility and weakened business sentiment.

Malhotra said global growth is expected to slow, while inflation is likely to stay elevated through 2026. He added that uncertainty has grown further as some central banks have tightened monetary policy while others have taken a more cautious approach.