RBI holds repo rate: What it means for India’s real estate sector
The Reserve Bank of India (RBI) on Friday kept the key repo rate unchanged at 6.5% in its monetary policy review. This marks the 11th consecutive instance of no change in the rate, providing no immediate relief for home loan borrowers. Consequently, home loan interest rates are expected to stay steady for the time being, influencing potential homebuyers’ affordability and decision-making.
This move comes amid concerns over India’s economic growth, as the country’s real GDP growth slowed to a seven-quarter low of 5.4% in the July-September 2024 quarter. The RBI’s primary focus remains firmly on curbing retail inflation and achieving its target of 4%.
Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP of NAREDCO Maharashtra, said, “With India’s GDP expected to grow at 6.5–7% in FY 2024-25 and the real estate sector contributing 7% to the economy, this stability is vital for maintaining economic momentum.”
She adds, “With property prices rising, stable lending conditions and a steady market make real estate a key driver of economic growth, boosting demand and contributing significantly to India’s economic progress.”
Vishal Jumani, Joint Managing Director, Supreme Universal said, “With steady interest rates, buyer confidence will likely increase, driving steady demand and supporting sector growth. Moreover, the positive correlation between tax relief measures and high-end property sales is expected to persist. The combination of stable interest rates and reduced stamp duty will continue to drive sales of properties. This favorable environment will benefit both developers and homebuyers, ultimately fostering growth in the real estate sector.” He further adds, this stability in interest rates is particularly beneficial for high-value markets like Mumbai and Pune.
However, Dharmendra Raichura – VP & Head of Finance at Ashar Group observes: “A rate cut would have been a timely stimulus to revitalize consumer demand across various industries, ultimately boosting economic growth in the third quarter of FY 2025.”
