The Reserve Bank of India’s 25 basis points repo rate hike to 5.50% has drawn mixed reactions from industry leaders, with real estate experts warning of pressure on affordability and festive housing demand, while also maintaining that strong economic and structural fundamentals will continue to support genuine housing demand.
The RBI repo rate hike comes against the backdrop of inflationary pressures and geopolitical uncertainty.
The central bank has projected FY27 GDP growth at 7.1%, while inflation expectations for the year have been projected at 5.2%.
VTP Realty Says Pune, MMR Housing Demand Remains Strong
Sachin Bhandari, CEO & Executive Director, VTP Realty, said the increase in the repo rate is not in the best interest of the common man, particularly as households are already facing higher fuel prices, inflation and rising costs.
“The repo rate hike is not in the best interest of the common man. Fuel prices are already high, inflation is putting pressure on household budgets, and people are already dealing with rising costs. At a time like this, an increase in borrowing costs adds to that pressure,” Bhandari said.
However, he does not expect the marginal rate increase to materially impact housing demand in Pune and the Mumbai Metropolitan Region (MMR).
According to Bhandari, Pune and MMR continue to have strong fundamentals backed by employment, infrastructure and genuine end-user demand.
“That said, we do not expect a marginal rate increase to materially impact housing demand. Pune and MMR continue to have strong fundamentals, backed by employment, infrastructure and genuine end-user demand,” he said.
Bhandari said buying a home remains a long-term decision and that a small movement in interest rates is unlikely to change the decision when the location, product and value are right.
“For a homebuyer, buying a home is a long-term decision. If the location, product and value are right, a small movement in interest rates should not change that decision. The market may become a little more selective, but demand for the right homes in the right locations will remain strong,” he added.
RBI Repo Rate Hike: ANAROCK Warns of Pressure on Festive Housing Demand
Anuj Puri, Chairman of ANAROCK Group, said the repo rate hike by 25 bps was expected amid prevailing inflationary pressures and geopolitical uncertainty brought on by the Gulf conflict.
However, he said higher borrowing costs could put pressure on consumer sentiment and discretionary spending, which could have a direct bearing on housing demand during the festive season.
“The repo rate hike by RBI was expected because of the prevailing inflationary pressures and geopolitical uncertainty brought on by the Gulf conflict. The rate hike will put pressure on consumer sentiment and discretionary spending – this has a direct correlation to housing demand,” Puri said.
“The festive season is a key period for housing demand, and an increase in borrowing costs will affect buyer sentiment,” he added.
Puri also pointed to the rise in residential property prices across the top seven cities. According to ANAROCK Research data, average residential prices increased 7% year-on-year, further stretching affordability for homebuyers.
He said higher home loan costs could make buyers more selective and extend decision timelines, particularly in price-sensitive segments.
ANAROCK data showed that Q3 2026 recorded approximately 1,00,220 housing sales across the top seven cities, up 3% year-on-year and 10% quarter-on-quarter. Affordable housing accounted for 16% of these sales.
“This momentum will now be tested because even a modest increase in EMIs will result in deferred purchase decisions or budget recalculations among affordable housing buyers,” Puri said.
Commercial Real Estate Expected to Remain Resilient
While residential real estate could see some impact from higher borrowing costs, Puri said the repo rate hike is unlikely to have a direct impact on commercial real estate.
Commercial real estate continues to be driven by structural demand from global capability centres (GCCs), technology, BFSI and other occupier segments, according to Puri.
Retail real estate, however, could see some near-term impact as higher financing costs combine with the possibility of softer festive consumption.
“Higher financing costs coupled with the possibility of softer festive consumption could make developers and investors more cautious. Some new mall projects could potentially be deferred until there is greater clarity on demand,” Puri said.
RBI Repo Rate Hike: Indian Bank Highlights 7.1% GDP Growth Outlook
Indian Bank MD & CEO Binod Kumar highlighted the resilience of the Indian economy following the RBI’s policy decision.
“RBI’s projected GDP growth for FY 27 of 7.1% reflects the resilience and strong macroeconomic fundamentals of the Indian economy. With the global monetary conditions remaining tight and inflationary expectations now projected at 5.2% for FY27, the RBI has also indicated a calibrated tightening by repo rate hike to 5.5% for managing India-US yield differentials,” said Binod Kumar, MD & CEO, Indian Bank.
Kumar said Indian Bank remains committed to supporting customers through its lending and deposit offerings.
“Indian Bank remains committed to support our customers through competitive lending rates and attractive deposit yields through timely policy rate transmission,” he said.
Cautious Approach Towards Maintaining Macroeconomic Stability: Tribeca
Rajat Khandelwal, Group CEO, Tribeca Developers said, “The RBI decision of repo rate hike reflects a cautious approach towards maintaining macroeconomic stability amid evolving economic conditions. While the repo rate hike may lead to some upward pressure on borrowing costs and EMIs in the near term, we believe the underlying demand for quality housing, particularly in premium markets such as MMR, NCR, and Pune, remains resilient.
At Tribeca, we see end-user confidence, strong economic fundamentals and the long-term value proposition of premium real estate continuing to support market momentum. A stable and well-calibrated interest rate environment will be important in sustaining healthy growth across the sector.”
