RBI cuts Repo Rate to 5.25%, spurring optimism in the real estate industry 

In a major relief to home buyers and other benefiting the consumers, the Reserve Bank of India has announced a repo rate cut. 

The Monetary Policy Committee (MPC) met on the 3rd, 4^th, and 5th of December to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic conditions and the outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points (bps) to 5.25 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.50 per cent. The MPC also decided to continue with the neutral stance. 

Also read: RBI Holds Repo Rate; Boost Expected for Housing Market 

The RBI also unveiled two liquidity-focused measures. It plans to carry out Open Market Operation (OMO) purchases totaling Rs 1 lakh crore to help maintain smoother financial conditions, and it will execute a three-year dollar–rupee buy–sell swap of $5 billion in December to aid currency management. 

This has come particularly as a fillip to real estate, spurring optimism among leading real estate industry figureheads. 

Industry leaders believe this policy move will accelerate homebuying—especially in mid-income, premium, and luxury segments—while also strengthening the viability of commercial expansions and new investments 

Offering his thoughts, Prashant Sharma, President, NAREDCO Maharashtra, said, “The RBI’s decision to reduce the repo rate by 25 basis points comes at a perfect time for the industry and reinforces India’s Goldilocks moment of low inflation and strong growth. A lower interest rate regime will provide much-needed momentum to housing demand, especially in the mid-income and premium categories where sentiment has remained strong. With inflation stabilising and GDP growth accelerating, this policy move will not only improve homebuyer affordability but also support developers by reducing overall borrowing costs. We expect the rate cut to trigger improved sales velocity across key markets in Maharashtra.” 

Shraddha Kedia-Agarwal, Director, Transcon Developers, opined, “A 25 basis-point rate reduction, combined with a neutral stance, reflects the RBI’s confidence in India’s economic fundamentals. For end-users, especially in metropolitan markets like Mumbai, even a small EMI correction significantly impacts affordability. We expect this rate cut to boost sales in the luxury and upper-mid segments, where consumer sentiment is already positive due to rising disposable incomes and aspirational living. This policy move will give homebuyers the comfort and confidence to upgrade and invest.” 

While commenting on the outcome of the MPC Mr. Ankur Jalan, CEO, Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF) states, “From depositors’ standpoint, a 25bps cut in repo rate will create concerns about declining returns on fixed deposits and other interest-bearing savings. Furthermore, this would likely push banks to trim deposit rates in the coming months, making it harder for savers to earn meaningful returns. While lower rates may support broader economic growth, affluent investors and family offices often redirect capital toward higher-return products such as real estate–focused Category II AIFs to preserve real yields, thereby improving fundraising momentum for these funds. A lower interest-rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn expands the opportunity for AIFs.” 

Vijay Harsh Jha, Founder and CEO of property brokerage firm VS Realtors mentions,“The housing market has shown signs of a slowdown. A 25-bps rate cut and its proper transmission would provide homebuyers cushion from rising property prices thereby encouraging home purchases. Developers, too, stand to benefit from lower cost of borrowing enabling faster project execution. The housing demand-supply dynamics seem to be aligning since second half of 2024 and this pursuit of symmetry, in what developers are launching and what buyers want, will help propel real estate market.” 

Shilpin Tater, Managing Director, Superb Realty, had this to say. “The RBI’s 25 basis-point repo rate cut will positively impact both residential and commercial real estate. On the residential front, lower borrowing costs will enhance affordability and accelerate purchases, especially among first-time and young homebuyers. For the commercial segment, a softer rate environment improves capex viability, boosts investor sentiment, and encourages businesses to expand or upgrade office spaces. With GDP growth robust and inflation at record lows, this rate cut positions the sector for a strong growth cycle across both asset classes in FY2026.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, struck a bullish note. “The RBI’s calibrated 25 bps rate cut is a welcome breather for the real estate sector at a time when the rupee’s volatility and global headwinds were beginning to cast uncertainty. Home loan EMIs are likely to see marginal improvement, which will further strengthen buyer confidence—particularly among fence-sitters waiting for a softer interest rate environment. With demand already buoyant and inflation at near-zero levels, this decision will lend additional stability and stimulate fresh investment into both residential and commercial real estate.”