Repo rate cut Impact on Real Estate: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) made a big announcement on Friday by reducing the repo rate by 25 basis points to 5.25 percent. Earlier it was 5.5 percent. As soon as the Reserve Bank announced the reduction in repo rate, it seemed as if the real estate sector came to life. Shares of DLF, Oberoi Realty and Prestige jumped up to 2 percent.
Now the question comes that why is there so much enthusiasm in real estate due to low repo rate? This is because the reduction in repo rates is an indirect boost to the real estate sector as it makes loans cheaper for home buyers, especially in the low-cost and mid-income segments. Let us see how people associated with the real estate industry responded to the repo rate cut by RBI:-
Confidence in real estate ecosystem will increase
Mr. Jash Panchamia, Executive Director, Jaypee Infratech Limited, said, “RBI’s decision to cut the repo rate by 25 basis points has come at a time when inflation is under control and the economy is stable. This step is expected to increase consumption in all sectors, which will strengthen overall economic growth. The housing sector, especially affordable and mid-segment housing, will benefit as low home loan rates will make buyers cautious in purchasing decisions. As a result, this may have a positive impact, which will increase the demand for good houses and strengthen the market activity. Also, investment sentiment will get support and long-term confidence in the real estate ecosystem will increase.
Vikas Garg, Joint Managing Director, Ganga Realty, says, “RBI’s repo rate cut by 25 basis points is a big and positive step for the real estate sector. Due to reduced interest, home loans will become cheaper, which will increase the confidence of buyers and strengthen the demand for mid-income and premium housing. With low EMI, even those buyers who were already waiting for a better environment will be able to take a quick decision.
Real estate liked RBI’s decision
Pradeep Agarwal, Founder and Chairman, Signature Global (India) Limited, says, “We welcome the decision of RBI to reduce the repo rate by 25 bps to 5,25 percent amid falling inflation, , This step will definitely support the ongoing pace of overall economic growth, which will further strengthen demand and investment activity, The real estate sector continues to be on a growth path as the 100 bps reduction in the overall repo rate by the RBI, along with the income tax relief given in the Union Budget and the GST rate rationalization earlier this year, have not only made home loans cheaper, but have also significantly improved the overall affordability for home buyers, “This latest rate cut is expected to further strengthen market sentiment, enhance purchasing power and support continued growth in housing demand across key segments, thereby ensuring real estate remains a preferred long-term asset class,”
Sahil Aggarwal, CEO of Nimbus Realty, says that the market needed relief in interest rates for a long time. This reduction in repo rate is important for both the builder and the buyer. Customer interest in new launches and under-construction projects will increase. This decision can pave the way for 15–20 percent growth in demand in the housing sector from the next quarter. We are confident that the pace of housing activities in NCR will be clearly visible.
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