Big Relief for Real Estate! RBI ’s 50 bps Rate Cut Major Boost for Affordable Housing: Industry Leaders' Take

The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points, bringing it down to 5.5%, in response to moderating inflation and slowing economic momentum. This marks the third consecutive rate cut by the central bank in 2025 and is aimed at stimulating consumption, credit growth, and real estate demand-particularly in the affordable and mid-income housing segments

RBI boosted hopes for increased housing demand in the real estate sector by cutting the repo rate by 50 basis points to 5.5%. Governor Sanjay Malhotra led the decision, which went beyond market expectations of a 25 basis points cut.

Amit Prakash Singh, Chief Business Officer at Urban Money and Co-Founder of Square Yards, shared his perspective on the Reserve Bank of India's recent 50 basis point repo rate cut. He described the move as expected and strategically aligned with efforts to stimulate economic growth.

This substantial reduction is expected to ease borrowing costs significantly, reduce EMIs, and increase disposable income - all of which are likely to support domestic consumption and drive demand across sectors."

"With inflation well within the RBI's comfort range, the move reinforces the central bank's focus on growth and is poised to have a meaningful impact on the credit landscape, encouraging both consumer and business lending. It signals a timely and growth-oriented policy stance in the face of a moderating economic outlook," said Amit Prakash Singh, CBO Urban Money & Co-Founder Square Yards.

According to ANAROCK Research, the share of affordable housing sales across India's top seven cities dropped from 38% in 2019 to just 18% in 2024. Similarly, the supply share of affordable homes also fell from 40% to 16% over the same period. However, a 19% decline in unsold inventory during this time suggests there is still healthy end-user demand-particularly if financial conditions improve.

"The reduction in the Cash Reserve Ratio (CRR) will help boost liquidity in the banking system, which means that banks have more funds to lend. Developers will be able to access more capital for their projects, and this can positively impact project completion timelines. It also gives banks the option to reduce home loan interest rates, which will have again positively impact sentiment in the affordable and mid-income segments," Said Anuj Puri, Chairman of ANAROCK Group.

"While the rate cut is a strong positive for real estate, especially for affordable housing, much now depends on how well it can adapt to higher input costs and ongoing global uncertainties," Mr Puri added.