RBI’s 50 bps Rate Cut Boosts Growth Outlook, Spurs Optimism in Real Estate Sector

Mr Vimal Nadar, National Director & Head, Research, Colliers India

The RBI has reduced the repo rate further by a strong 50 bps – bringing it down to 5.5%, the lowest in almost three years. The third consecutive reduction in benchmark lending rate coupled with shifting to neutral stance reaffirms the growth-supportive monetary policy aided by softening of inflation levels. Despite external volatilities and evolving trade scenarios, the Central Bank projects the domestic economy to grow at 6.5% in Fiscal 2025-26. For the real estate sector, this move is a strong tailwind: it lowers borrowing costs for buyers & developers, boosts homebuyer confidence, and enhances affordability, especially in the affordable and mid-income housing segments. This could lead to improved buyer sentiment, an increase in residential property enquiries and conversions, and a pickup in sales volumes across key urban markets. Over the medium term, the reduction in the cost of capital is also expected to enhance investor confidence, potentially boosting activity in both residential and commercial real estate segments.

Amit Prakash Singh, CBO Urban Money & Co-Founder Square Yards

“The RBI’s decision to cut the repo rate by 50 basis points was on the expected lines and marks a proactive step toward stimulating 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.”

Piyush Bothra, Co-Founder and CFO, Square Yards

“The 50-basis point rate cut, though bold but expected, reflects the central bank’s acknowledgement of a shifting macroeconomic landscape. With the full-year FY25 GDP growth projected at only 6.5% — slowest since the pandemic, there is clear evidence of softening momentum. With inflation at a manageable 3%, the RBI had enough headroom to ease policy without triggering price instability. For the real estate sector, which has already been witnessing mellowed growth — this move is the right dosage which was required to unleash the animal spirits. A 50-bps reduction will translate into meaningful EMI savings, improving affordability for homebuyers. It will also give developers greater confidence to move ahead with new launches, especially in the low-to-mid segments.”