The festive season is likely to remain a key driver of residential sales even after the Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent, with developers expecting buyers to stay active across key housing segments. The timing of the rate move is significant as developers enter one of the year’s busiest periods for housing demand and sales.
The increase follows a period of easing rates and comes amid renewed global uncertainty, crude-price volatility and concerns over inflation. Yet the domestic economy continues to show strength, with real GDP growth at 7.8 per cent in the first quarter. In housing, the effect of a marginal increase in borrowing costs is expected to vary across segments, with factors such as the purpose of purchase, household finances and the nature of the property also influencing decisions.
Premium, luxury segments remain insulated
According to BK Malagi, CEO & Vice Chairman, Experion Developers, the RBI’s decision to raise the repo rate by 25 basis points to 5.50 per cent reflects a calibrated response to evolving inflationary and global economic conditions.
“While borrowing costs may see a marginal adjustment, India’s underlying economic fundamentals remain resilient, supported by strong GDP growth and sustained consumer confidence. From a real estate perspective, we do not expect a 25-basis-point increase to materially impact housing demand, particularly in the premium and luxury segments, where purchase decisions are driven more by long-term wealth creation, lifestyle aspirations and the quality of the offering than by marginal movements in interest rates. With the festive season underway, we expect buyer sentiment and demand momentum to remain positive,” Malagi said.
Long-term growth fundamentals drive buyer aspiration
Real estate developers are of the view that the RBI’s 25-basis-point repo rate hike to 5.5 per cent reflects confidence in the resilience of the Indian economy and its growth trajectory, and for real estate, the fundamentals remain exceptionally strong, with sustained housing demand, rising aspirations and continued infrastructure development supporting the sector’s momentum.
“We see this as an encouraging phase for residential real estate, where homebuyers are increasingly seeking quality, well-planned communities and long-term value. The sector’s strong fundamentals and evolving consumer preferences will continue to create significant opportunities for developers and buyers alike,” Sanjay Sharma, Director, SKA Group, said.
Affordability and delivery credibility take centre stage
They believe the RBI’s 25-basis-point increase brings affordability and repayment planning into sharper focus for the housing market.
“Homebuyers may take more time to assess financing options, making clarity on the total purchase cost and confidence in project delivery increasingly important. We believe homeownership sentiment will remain positive, particularly among families buying for their own use. The central bank’s emphasis on price stability supports a sound economic environment over the longer term. For the industry, this adjustment calls for realistic purchase timelines, with buyer interest likely to translate into transactions where financial comfort and project credibility are closely aligned,” Salil Kumar, Director, Business Management & Marketing CRC Group, concluded.
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