RBI keeps repo rate unchanged at 5.5%, supporting market stability
Stable borrowing costs likely to boost homebuyer sentiment and developer confidence
GST cuts on cement expected to lower construction costs by 3–5%, reducing home prices by 1–1.5%
The RBI’s decision to keep the repo rate unchanged at 5.5% on October 1 is being seen as a stabilising move for the real estate market. The pause provides predictability in borrowing costs, which is likely to support homebuyer sentiment and developer confidence, particularly in the affordable housing segment.
Experts note that the gradual transmission of previous rate cuts, along with a stable macroeconomic outlook and moderate inflation, is set to bolster demand across real estate sectors, including housing, warehousing, retail, and luxury properties.
“It reflects a measured approach ahead of the festive season, and midst volatile global macroeconomic and policy conditions. Along with the recent GST cuts and range-bound inflation, the announcement is likely to lift consumer sentiment and may encourage greater demand across key sectors in the coming weeks,” said Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.
The unchanged rate cut is fostering a favourable environment for housing, with GST reductions easing costs, festive-season optimism encouraging hesitant buyers, and stable interest rates keeping EMIs predictable. Magazine also expects the consumption to improve and market momentum to accelerate further.
Affordable, Mid-Housing Segments Gain
As per latest ANAROCK data, Q3 2025 residential sales in India’s top seven cities — Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata — fell 9% year-on-year to 97,080 units. However, the total sales value rose 14% to ₹1.52 lakh crore, highlighting a clear shift toward premium and mid-segment homes.
For instance, Mumbai and Delhi NCR accounted for 38% of total sales value, driven by mid-to-luxury segment transactions, while affordable housing contributed just 18% of total sales, down from 38% in 2019.
However, banks are yet to fully transmit the earlier 100 basis points repo rate reduction, which is expected to be completed soon in the ongoing festive season, said Vimal Nadar, National Director and Head of Research, Colliers India.
According to him, the decision is expected to specifically benefit homebuyers in the affordable and mid-income segments. Additionally, the recent GST rationalisation in key construction materials such as cement can allow room for developers to lower prices and offer lucrative deals to push housing sales.
“With GST on cement reduced from 28% to 18%, construction costs are expected to fall by 3-5%, potentially reducing home prices by 1-1.5% for buyers. This reduction could save homebuyers ₹1-3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high,” said Anuj Puri, Chairman, ANAROCK Group.
Data shows that affordable housing's share has declined from 38% in 2019 to just 18% in 2024, making these GST cuts crucial for reversing this trend. “The combination of stable interest rates and lower construction costs creates a favourable environment for housing demand, especially during the ongoing festive season.”
Previous Easing, Market Outlook
On the other hand, Amit Prakash, cofounder and CBO of Urban Money, stated that the RBI MPC’s decision reflects a “wait-and-watch” approach because the gains of earlier easing are still unfolding. And at the same time, global uncertainty and currency weakness argue against pushing policy too far.
“For borrowers, the environment is already improving with banks gradually reducing lending rates, helping sustain household consumption and credit demand. The pause allows space for the impact of past actions to play out, while leaving scope for the central bank to step in with fresh easing if needed in ensuing months,” Prakash added.
While a rate cut would have further encouraged affordability and investments, Amit Jain, CMD of Arkade Developers Limited, said maintaining status quo ensures that the ongoing momentum in residential sales remains on track.
“The real estate sector continues to be a key contributor to GDP and employment, and steady loan terms will support buyer confidence in the months ahead. We remain hopeful that the sector’s growth momentum will strengthen further, and look forward to building greater confidence within the market,” he said.
