The Reserve Bank of India’s decision to raise the repo rate by 25 basis points to 5.50 per cent could put some pressure on home loan affordability and make prospective buyers more cautious, particularly in interest-rate-sensitive segments. However, real estate developers and industry representatives believe the impact on housing demand is likely to remain limited, supported by healthy buyer interest, rising incomes and the upcoming festive season.

While premium housing and luxury properties may be better placed to absorb higher borrowing costs, affordability in the mid-segment could come under greater scrutiny if interest rates rise further. The trajectory of inflation and the possibility of additional rate hikes will be key to determining how the housing market responds in the coming months.

Here is what the industry experts said:

Lata Pillai, Senior Managing Director and Head – Capital Markets, India, JLL: “The RBI raised the repo rate by 25 basis points to 5.50%, with the stance turning to calibrated tightening. This marks the first increase since February 2023 and follows four consecutive holds at 5.25%. The stance of further movements being likely towards pause and/or hike rather than a cut in repo, is indicative of the change in the sentiment. Rising inflationary pressures as CPI inflation rose to 4.82% in August, well above the threshold and an accelerating food inflation for the seventh straight month were likely factors that impacted the rate hike decision. The move is a pre-emptive measure to account for further inflation peaks later in the year, projected at 5.2% for CPI inflation for the current year and 5.7% for the next.

For real estate, the rate certainty of the past year is likely coming to an end. We do expect that floating home rates will be repriced and higher construction costs will be passed onto the buyers, with mid-segment affordability likely to remain under the scanner. Demand fundamentals remain strong and a robust GDP growth, growing investments and a healthy construction sector likely to absorb the negative impact. The pace and extent of any further rate hikes are likely to matter more to the overall market than a single 25 bps hike. Overall, this is a measured move in tandem with global movements and will be felt in EMIs and construction costs, but the overall direction and extent of the tightening will be more relevant for the sector.”

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE: “We expect the impact of the rate hike on housing demand to stay measured, particularly in the mid and premium segments, where the underlying demand is still healthy. While the 25 basis point increase will push borrowing costs up a little, but we expect the sector to hold up. The sector has demonstrated resilience through this cycle, supported by robust growth fundamentals and strong buyer intent. What matters from here is where inflation and interest rates go, and whether this increase stays a calibrated response rather than the start of a long tightening cycle.”

Praveen Jain, President, NAREDCO: “The festive season is a very important period for the real estate sector, and stability in interest rates during this period remains positive for homebuyers. However, it is also important to control inflationary pressures and maintain stability in the economy. In this context, the 25 bps increase in the repo rate should be viewed in the context of the broader economic conditions. Housing demand remains strong at present. We expect the impact of this increase on the residential market to remain limited, supported by strong buyer sentiment, festive demand and the long-term need for homeownership. The real estate sector will continue to demonstrate strength and resilience in maintaining its current momentum.”

Sahil Agarwal, CEO, Nimbus Group: “The RBI’s decision to increase the repo rate reflects its continued focus on maintaining macroeconomic stability and managing evolving inflationary conditions. The real estate sector remains well placed, supported by healthy demand, improving consumer confidence and sustained interest in quality residential and plotted developments. With infrastructure-led growth and expanding opportunities across emerging markets, the sector continues to demonstrate resilience. We remain optimistic about the outlook for real estate, with demand expected to remain steady across metropolitan as well as Tier-2 and Tier-3 cities.”

Pyush Lohia, MD, Lohia Worldspace: “The increase in the repo rate signals the RBI’s continued focus on maintaining economic stability. From a real estate perspective, the impact is likely to differ across buyer categories, with the premium and luxury segment generally better positioned to absorb moderate changes in financing costs. The festive season should continue to provide a strong window for transactions, supported by buyers who are making purchase decisions based on location, product quality and long-term value rather than interest rates alone. For developers, disciplined capital management and efficient project execution will remain important in this environment.”

Vikas Bhasin, Managing Director, Saya Group: “The RBI’s decision to increase the repo rate by 25 basis points is a positive and calibrated move that will help maintain healthy liquidity conditions while keeping inflationary pressures under check. The Indian economy continues to remain resilient and maintain its growth momentum. Given that home loan interest rates are still at relatively attractive levels, a marginal increase in borrowing costs is unlikely to deter end-user homebuyers. We are witnessing strong demand in the real estate market and expect this momentum to continue, with end-users continuing to make purchase decisions and take advantage of festive offers and attractive discounts.”

Pratik Tibrewala, SVP & Head Corporate Finance, M3M India; “The RBI’s 25 bps repo rate hike to 5.50% is a calibrated step to anchor inflation amid global volatility. While borrowing costs may inch up marginally, long-term stability of the rupee helps in attracting global capital and will benefit the real estate sector. The demand for premium housing and commercial assets continues to be strong and is driven by wealth creation.”

Santosh Agarwal, Executive Director & CFO, Alpha Corp Development Limited: “The RBI’s decision to raise the repo rate by 25 basis points marks a cautious shift in the interest-rate environment, particularly after a prolonged period of stability. While the move could marginally impact borrowing costs and financing sentiment, we do not expect it to significantly disrupt the underlying momentum in the real estate sector. Housing demand, especially in the premium and mid-to-high-end segments, continues to be supported by improving incomes, urbanisation and strong end-user confidence. Developers may see some moderation in financing costs and buyer sentiment in the near term, but the sector’s structural growth drivers remain intact. The focus will now remain on maintaining demand resilience and market stability.”

Amrita Gupta, Director, Manglam Group and CEO, Manglam Spa & Resorts Pvt. Ltd: “A repo rate increase to 5.50% brings some pressure on borrowing costs, but the real estate market today has a stronger foundation to absorb a calibrated move. One of the more interesting trends is the growing depth of demand beyond the metros. Tier-2 cities are seeing buyers who are increasingly discerning about the quality of development, connectivity and the long-term potential of the location, rather than making decisions purely on price. From a developer’s perspective, this makes strong fundamentals even more important. The festive period is already seeing heightened interest, and higher rates may encourage some buyers to take a little more time. However, genuine end-user demand is likely to remain resilient where projects are well planned and aligned with evolving aspirations.”

Mohit Goel, Managing Director, Omaxe Limited: “The RBI’s decision to raise the repo rate to 5.50% signals a clear focus on managing inflationary pressures and maintaining macroeconomic stability. The real estate industry will see an impact through higher borrowing costs and some moderation in buyer sentiment, particularly in interest-rate-sensitive segments. However, the underlying demand for housing remains supported by rising incomes, evolving aspirations and a strong preference for quality, well-planned developments. The focus for developers will be on sustaining value for homebuyers while maintaining execution discipline and delivering projects that align with changing market needs.”

Binitha Dalal, Founder and Managing Partner, Mt. K Kapital: “The RBI’s 25-basis-point rate hike and shift from a “neutral” to “calibrated tightening” stance comes at a difficult juncture, with the West Asia crisis continuing to keep oil prices elevated and adding to the cost of essentials and overall living expenses. At a time when the full economic impact of the conflict is still unfolding, greater visibility on its trajectory would have allowed for a more measured policy response. The indication that rate cuts are not being assumed going forward further signals the RBI’s caution on the inflation outlook.

While the economy has the resilience to absorb higher costs, every additional increase has a multiplier effect across households, businesses and sectors. Higher borrowing costs and home-loan rates could put further pressure on consumers just as the festive season begins, potentially tempering discretionary spending and investment activity. This also comes against a backdrop where the first two quarters have seen some moderation in economic performance. In my opinion, the rate decision could have been delayed until there was greater clarity on the trajectory of the West Asia crisis and its impact on inflation and growth.”

Jash Panchamia, Executive Director, Suraksha Infra And Developers Limited (Formerly Jaypee Infratech Limited): “The RBI’s decision to raise the repo rate by 25 bps from 5.25% is a measured response to a complex global and domestic environment. Inflationary pressures, geopolitical tensions, energy price swings and a cautious global capital climate have left the central bank with limited room to maneuver. Monetary policy has to look at the broader economy, including interest-sensitive sectors like housing, and the RBI has acted with that larger picture in mind. The immediate effect will be felt in home loan affordability, and some buyers may defer decisions in the short term. Even so, the demand drivers for real estate remain firmly in place. Our view is that a steady rate environment would have offered the sector more comfort, but long-term end-user demand should continue to anchor growth.”

Ashish Agarwal, Director, AU Real Estate: “The 25 bps increase in the repo rate is likely to bring a little more consideration to financing decisions, but the underlying housing demand in NCR remains steady. Homebuyers today are looking beyond the immediate cost of borrowing and evaluating factors such as location, connectivity, quality of construction and long-term value. For genuine end-users, the decision to buy is increasingly linked to lifestyle and life-stage needs. A measured approach from buyers is expected, with preference continuing to favour well-located, thoughtfully planned homes that offer a clear value proposition.”

Rajan Luthra, CFO, ACE- Action Construction Equipment: “The RBI’s decision to raise the repo rate by 25 basis points to 5.50% reflects a calibrated tightening in response to evolving inflationary pressures and persistent global uncertainties. While geopolitical developments and global commodity price volatility remain key risks, India’s economic fundamentals continue to remain resilient. For the construction equipment sector, higher financing costs may impact investment decisions in the near term. However, sustained government capex and infrastructure activity across roads, railways and urban development should continue to support demand and sector growth. At ACE, we remain focused on product innovation and strengthening our capabilities to meet India’s evolving infrastructure needs. With strong long-term fundamentals, we remain committed to our growth plans and supporting India’s infrastructure development.”

Anil Godara, Managing Director, J Estates: “The senior living segment is fundamentally different from conventional housing because the purchase decision is often driven by life-stage requirements rather than interest-rate movements alone. A 25 bps increase may influence financing considerations, particularly for families supporting the purchase, but it does not change the underlying need for safe, accessible and professionally managed living environments. As India’s ageing population grows, senior citizens are increasingly looking for homes that provide healthcare access, social interaction, security and longevity. That structural demand is likely to remain relatively resilient even in a slightly higher-rate environment.”

Parvinder Singh, CEO, Trident Realty: “The modest increase in the repo rate may encourage some buyers to take a more measured approach, but it is unlikely to change the broader shift underway in Tier-II housing markets. Premium homes and plotted developments are increasingly finding favour as buyers look for larger spaces, better locations and greater flexibility in how they build and use their homes. In many emerging cities, buyers also see the purchase as a long-term asset decision. This combination of aspiration and investment value should continue to support demand, even as buyers remain mindful of financing costs.”

Vikas Garg, Joint Managing Director, Ganga Realty: “The RBI’s decision to raise the repo rate by 25 basis points to 5.50% comes at a time when the Indian economy continues to demonstrate resilience and the real estate sector is entering its crucial festive season. While the rate movement may have a marginal near-term impact on borrowing costs, we believe the underlying fundamentals of residential real estate remain strong. Homebuyers today are increasingly looking at housing as a long-term investment, supported by improving infrastructure, rising incomes, and growing aspirations for better homes. The festive period traditionally brings renewed buying activity, and we expect this momentum to remain healthy, particularly across well-established markets such as Gurugram. Developers will continue to focus on offering value-driven propositions and attractive schemes that support buyer decisions. Overall, we remain optimistic about the sector and expect end-user demand to remain resilient through the festive season and beyond.”