Steady repo rate to aid housing demand, affordable segment awaits boost

Steady repo rates aid housing demand, affordable segment awaits boost

The Reserve Bank of India’s decision to keep the repo rate unchanged is expected to stabilise interest rates and sustain housing market momentum, developers and real estate experts have said.

The RBI's monetary policy committee (MPC) decided to hold the repo rate at 5.25 percent on February 6, a move widely seen as balancing growth imperatives with inflation management.

Market observers said the decision, coming after a cumulative 125 basis points cut since February 2025, would support consumer sentiment, give predictability to developers, and ensure housing demand sustains momentum into 2026.

The policy pause creates a supportive ecosystem for housing as goods and service tax (GST) cuts are cushioning affordability and steady interest rates are ensuring predictable EMIs.

CBRE chairman and CEO (India, South-East Asia, Middle East & Africa) Anshuman Magazine said the decision provides both stability and predictability to the real estate sector. “With inflation being comfortably low and progress on the India-US trade agreement, stable policy rates are likely to support organic growth in the sector, offering long-term visibility to developers and investors,” he said.

Developers eye long-term stability

Policy continuity has brought much-needed stability for home loan borrowers, Manju Yagnik, vice chairperson of Nahar Group and senior vice president of NAREDCO Maharashtra, said.

“An unchanged rate has ensured that EMIs on floating-rate loans remain steady, offering predictability at a time when housing demand continues to stay resilient across major urban markets. From a real estate perspective, a neutral monetary stance has also allowed developers to plan financing and project execution more efficiently, without the pressure of fluctuating interest costs,” she said.

Dharmendra Raichura - VP and Head of Finance, Mumbai-based Ashar Group, said for the real estate sector, an unchanged rate environment brings stability to funding costs, supports disciplined cash-flow management, and enables uninterrupted project execution.

Confederation of Real Estate Developers Associations of India (CREDAI) president Shekhar G Patel said the decision to maintain the repo rate at 5.25 percent provides policy stability amid global currency volatility and bond-yield pressures.

“At CREDAI, we view this continuity as constructive for real estate, where predictability in financing costs is essential for sustaining demand and investment sentiment. As liquidity conditions normalise, a stable rate regime supports measured growth across segments. CREDAI believes that calibrated monetary easing over time can further improve housing affordability,” he said.

Nothing for affordable housing revival

Anarock Group chairman Anuj Puri said the decision would keep buyers engaged but does nothing to lift demand or to make housing more affordable. “Demand for affordable and mid-segment homes remains strong, but continues to be challenged by escalated pricing, which affects affordability. A rate cut would have potentially brought at least some fence sitters back to the market,” he said.

The overall sales share of affordable housing was just around 18 percent in 2025. In 2024, out of the sales of approximately 4.60 lakh units in top seven cities, affordable housing share stood at 20 percent. This was highest at 38 percent in 2019.

“The affordable housing segment needs focused, high-impact measures like tax breaks - for developers, so that they shift their focus more on affordable housing from the current premium and luxury segments, and for buyers, to improve affordability,” he said.