Real estate industry leaders have expressed approval of the Reserve Bank of India’s choice to keep the repo rate steady at 5.25 percent, foreseeing it as a factor that will uphold stability in mortgage rates. This decision is seen as a relief for developers and homebuyers, particularly amidst elevated construction costs due to the ongoing West Asia crisis. The pause in the repo rate is expected to help mitigate the impact of increasing input costs on demand, allowing stakeholders to adjust their strategies in line with market changes.
Shishir Baijal, International Partner, Chairman & Managing Director of Knight Frank India, highlighted that the neutral stance adopted by the RBI will offer much-needed predictability to the broader economy. Baijal emphasized that stable borrowing costs play a crucial role in maintaining affordability for homebuyers and enabling developers to plan with more certainty. This move is viewed as a stabilizing factor in a market sensitive to macroeconomic signals, fostering confidence among market participants.
Market analysts have raised concerns about supply-chain disruptions and escalating input prices posing challenges to both ongoing and future construction activities. Vimal Nadar, National Director & Head of Research at Colliers India, pointed out that the severity and duration of the current crisis will significantly influence consumption patterns across various sectors, including retail, hospitality, and housing demand, especially in the affordable and mid-income segments. Despite these challenges, Nadar expressed optimism in the real estate sector’s resilience in the medium term, buoyed by the Indian economy’s robust fundamentals.
The RBI’s decision to maintain the repo rate at 5.25 percent in its initial MPC meeting of the fiscal year reflects a cautious ‘wait-and-watch’ approach amid the ongoing West Asia crisis. The central bank has projected the country’s inflation rate, based on the Consumer Price Index (CPI), for 2026-27 at 4.6 percent, with GDP growth estimated at 6.9 percent.
