Rate Cut Hopes Ignite Real Estate Optimism Ahead of RBI Meeting

New Delhi, June 5, 2025: With the commencement of the Monetary Policy Committee (MPC) meeting, all attention is now focused on June 6, when the RBI is expected to announce its latest stance on the repo rate.

While a 25-basis-point cut is widely anticipated by market participants, a recent report by the SBI suggests that the RBI may go a step further, indicating the possibility of a sharper 50-basis-point reduction.

The repo rate stands at 6 per cent following two successive cuts of 25 basis points each in February and April. After April’s announcement, several leading banks promptly lowered their lending rates passing on the benefits to borrowers.

Any movement in the repo rate, especially a reduction, has a significant bearing on various sectors, most notably real estate. Lower borrowing costs translate into reduced home loan EMIs, making property ownership more accessible to aspiring buyers.

Real estate developers are hopeful that this policy move will boost buyer confidence and inject fresh energy into the sector. A lower policy rate not only facilitates home loans but also incentivises investment, especially in high-potential markets like Delhi-NCR, where constant development sustains the interest of buyers.

Per Anarock’s report ‘NCR Real Estate–A Beacon of Growth and Opportunity’, the region recorded an 81 per cent jump in average residential property prices between Q1 2020 and Q1 2025.

Greater Noida tops the price chart with 98 per cent growth in residential price appreciation, followed by Noida and Gurugram with 92 per cent and 84 per cent, respectively.
Given the current market momentum and shifting global economic sentiment, industry experts believe that a further rate cut could serve as a powerful catalyst for demand acceleration.

“Home loan EMIs comprise a significant portion of the monthly income for an average urban household. In such a scenario, even a marginal cut in interest rates has a noticeable impact on buyers,” says Amit Modi, Director, County Group.

“A 25-basis point reduction by the RBI can directly bring down EMIs, prompting buyers to take quicker decisions when it comes to property purchases.”

He adds, “Especially in regions like Noida, Greater Noida, and the Yamuna Expressway, people are investing with an eye on improved connectivity, modern infrastructure, and future growth potential. If interest rates fall further, it could present a golden opportunity for first-time homebuyers.”

Sanjay Sharma, Director, SKA Group, says, “A reduction in the repo rate will most benefit first-time homebuyers. When EMIs decrease, even those currently living on rent will find it easier to take the leap toward homeownership. This will make buying a home more accessible and achievable for many.”

He adds, “Such a move will not only strengthen the real estate sector but also play a crucial role in helping people realise their dream of owning a home.”

Yash Miglani, MD, Migsun Group, says, “Today’s buyers make decisions based not just on location or project design, but also on interest rates, resale value and the stability of EMIs. Since the RBI hinted at a possible rate cut, there has been a noticeable spike in user activity on real estate portals and an increase in site visits.”

He adds, “Lower EMIs provide buyers with a sense of financial security and mental reassurance. Besides, this is also an opportunity for developers to engage buyers through new schemes and attractive offers. This evolving trend could potentially double the sector’s growth momentum in the coming months.”

According to Amish Bhutani, MD, Group 108, “The previous repo rate cut acted as a crucial catalyst for the commercial real estate sector, especially in Noida and Greater Noida. With borrowing costs lowered, developers were able to accelerate investment in office spaces and retail infrastructure, revitalising supply pipelines.”

Moreover, these areas have “attracted growing interest from domestic companies and global occupiers seeking expansion. Looking ahead, a further rate cut or even policy stability, would boost market confidence, encouraging long-term commitments from investors and occupiers”.

He adds, “Notably, this impact is expected to be even more pronounced with the festive season approaching, a time when buyer sentiment typically peaks. Lower interest rates combined with the festive optimism could drive a significant surge in property bookings and investments, making this period critical for the real estate market’s momentum.”

Kushagra Ansal, Director, Ansal Housing, says, “Interest rates have a direct impact on home loan EMIs. If the RBI cuts rates again, buying a home will become even easier for the middle class. With lower EMIs, people will find it easier to make decisions. This will lead to a significant surge in flat bookings in the market.”

Sanjeev Arora, Director, 360 Realtor, states, “India is now progressing with financial stability. In such times, if the RBI cuts interest rates, it will inject new energy into the real estate sector. This will benefit not only developers but also boost buyers’ confidence and ease in property bookings.”

Manit Sethi, Director, Excentia Infra, says, “RBI’s repo rate adjustments profoundly impact housing affordability and loan repayment terms, which in turn shape real estate growth across both metros and emerging Tier-2 cities.”

Real estate, being highly sensitive to interest rate fluctuations, “has already witnessed renewed momentum. If the RBI reduces repo rate for the third time, it would steer the sector into a new growth phase. Further, it will not only ease home loan EMIs but also strengthen buyer confidence across expanding markets of tier 2 cities, encouraging buyers to make purchase decisions and developers to scale up investment”.

Nayan Raheja of Better Choice Realtors says, “If the upcoming monetary policy brings another rate reduction, it could act as a strong growth trigger, especially with the festive season around the corner.”

The momentum is “no longer confined to just the affordable housing segment; demand across mid-income and premium categories is also accelerating. A further cut would reinforce this trend, encouraging end-users and investors, and driving comprehensive growth across the real estate spectrum”.

Surendra Kaushik, Founder and MD, ARIPL, says, “Even a one per cent cut in the repo rate can save customers lakhs of rupees on a 20-year home loan. This saving becomes a major incentive for homebuyers. Not only does it help them decide faster, but it also strengthens their confidence in the real estate sector, which in turn boosts overall demand.”

Vishesh Rawat, VP, marketing, Sales and CRM, M2K Group, says, “Buying a home today is not just a necessity but a major financial decision. In this context, if the RBI cuts interest rates this year, buyer confidence will increase significantly. The real estate sector has recovered well post-pandemic, but continuously high interest rates had made buyers cautious. If loans become cheaper, the mindset will shift from ‘wait and watch’ to ‘buy now’.”

Prakash Mehta, CMD, Ocus Group, says, “If the RBI cuts interest rates ahead of the festive season, it will have a direct impact on the real estate market. Lower EMIs will encourage more customers to explore and book properties. This will not only increase market activity but also lead to a significant rise in demand, providing stability and strength to the entire sector.”

Saurabh Saharan, Group MD, HCBS Developments, says, “EMIs form a significant part of the monthly budget for common people. When they decrease, it becomes easier for customers to make quicker decisions. Thus, a relief in interest rates will give a fresh momentum to the real estate sector. This will not only boost buyer confidence but could also set new records in booking trends in the coming months.”

Harvinder Sikka, MD, Sikka Group, says that a cut in the repo rate benefits first-time homebuyers the most. “When EMIs go down, young individuals and small families living on rent are quick to decide on purchasing a home. They feel it makes more sense to pay EMIs for their own home rather than monthly rent. In our experience, whenever there is relief in interest rates, homebuyer confidence rises sharply, and there is a noticeable surge in property bookings.”

Umesh Rathore, VP, Sales and Marketing, VVIP Group, says, “With the RBI having already reduced the repo rate by 50 basis points this year and another cut anticipated in the upcoming policy, the Central bank is clearly signalling a shift towards an accommodative stance to bolster growth.”

He adds, “Lower borrowing costs can uplift developer sentiment, drive project launches and boost overall housing demand while also supporting allied sectors like construction and housing finance.”