RBI's status quo on rates to support housing demand, keep real estate sentiment intact: Industry

The Reserve Bank of India (RBI) on Wednesday kept the benchmark repo rate unchanged at 5.25% for the fourth consecutive monetary policy review, while retaining its neutral policy stance, as it balanced inflationary risks with the need to support economic growth.

In his policy statement, RBI Governor Sanjay Malhotra said geopolitical tensions in West Asia continue to weigh on the global economy by disrupting trade routes, affecting supply chains and increasing market volatility. While inflation has edged higher, the central bank noted that price pressures are not broad-based, giving it some room to maintain the status quo while remaining watchful of evolving growth-inflation dynamics.

The policy decision drew a positive response from the real estate industry, with developers and property consultants saying stable interest rates would support housing demand, improve buyer confidence and provide greater certainty for project execution.

Residential demand to remain resilient

With residential sales remaining healthy and borrowing costs largely unchanged, industry experts believe policy continuity will help sustain momentum in the housing market.

Lata Pillai, Senior Managing Director and Head – Capital Markets, India, JLL, said India's macroeconomic fundamentals continue to remain resilient despite inflationary concerns and elevated energy prices.

She noted that the RBI's decision provides certainty on lending rates for both developers and homebuyers, which should help keep the residential market on a stable footing.

"With H1 2026 residential sales remaining strong both sequentially and year-on-year, the status quo on interest rates is positive for the real estate market. The certainty around lending rates is expected to keep both developers and homebuyers relatively unfazed," Pillai said.

However, she cautioned that rising construction costs could eventually be passed on to buyers, putting pressure on affordability, particularly in the affordable and mid-income housing segments.

"While attractive lending rates continue to support demand, affordability remains an area to watch. A return of greater economic certainty should nevertheless support residential market performance through the rest of the year," she added.

Stable home loan rates to boost buyer sentiment

Developers believe predictable borrowing costs will encourage homebuyers to move ahead with purchase decisions while also improving investment appetite.

Sudeep Bhatt, Director – Strategy, Whiteland Corporation, said the RBI's decision to keep the repo rate unchanged sends a positive signal for the housing sector.

"Stable home loan rates directly support housing demand and improve liquidity for developers," Bhatt said.

He added that predictable EMIs and borrowing costs are likely to strengthen buyer sentiment while encouraging fresh investments in the sector.

Developers get greater planning visibility

Industry players also believe the stable rate environment gives developers better visibility on project execution and capital allocation.

Yateesh Wahaal, Director, M3M India, said the policy decision provides much-needed stability at a time when the global economic environment remains uncertain.

"A predictable interest rate environment supports buyer confidence by keeping home loan rates stable and sustaining end-user demand," Wahaal said.

He added that developers would also benefit from greater certainty while planning investments and executing ongoing projects, helping maintain the sector's growth momentum.

Continuity offers confidence

According to developers, the RBI's decision comes at a crucial time when the housing sector has been witnessing healthy demand across key markets.

Abhay Mishra, CEO & President, Jindal Realty, said maintaining the repo rate offers continuity for both developers and homebuyers.

"Stable borrowing costs help sustain housing demand while giving developers greater clarity for planning and execution," Mishra said.

He added that supportive policy measures and adequate liquidity would remain important to unlock the sector's long-term growth potential.

Growth-oriented environment

The unchanged policy rate is also expected to improve confidence among both consumers and developers by ensuring stable financing conditions.

Rishabh Periwal, Senior Vice President, Pioneer Urban Land & Infrastructure Ltd., said maintaining the repo rate at 5.25% reinforces a growth-oriented environment for the sector.

"Predictable home loan costs encourage buyer confidence and sustain housing demand, while stable funding conditions help developers plan project launches and execution more efficiently," Periwal said.

He added that the policy decision strengthens confidence across key real estate markets and supports the sector's long-term growth outlook.

Overall, industry participants believe the RBI has struck a balance between maintaining macroeconomic stability and supporting domestic demand. While affordability pressures arising from higher construction costs remain a concern, stable interest rates are expected to keep housing demand resilient and provide a supportive backdrop for the real estate sector in the months ahead.