Also Read: Myntra enters quick-commerce market with M-Now, to deliver goods in 30 minutes 

While the policy “will make home loans cheaper for home buyers, lending rates for developers, too, would come down,” said Gurpal Singh Chawla, MD of TREVOC. “Even a minor rate cut of 25 basis points will act as a major psychological booster for real estate.”

It also provides much-needed stability, especially during the festive quarter, when demand for homes is typically at its peak, according to Mohit Goel, Managing Director of Omaxe Ltd.

“This stability in home loan rates is crucial for maintaining buyer confidence and ensuring predictable repayment terms, which, in turn, boosts investment in the real estate sector,” he said.

He added that he expects a stronger sales momentum in the fourth quarter because of the “favorable conditions.”

The central bank’s monetary policy committee (MPC) decided to keep the repo rate unchanged at 6.5% for the 11th consecutive time, but slashed the cash reserve ratio (CRR) by 50 basis points, bringing it down to 4%, Governor Shaktikanta Das announced on Friday, December 6, 2024.

The CRR cut can especially be helpful in stimulating the sector since it could mean more affordable housing loans.

This came at a time of dilemma for the MPC since India’s inflation is rising and gross domestic product (GDP) growth is slowing. The repo rate on its own generally influences both of these factors in different ways.

“It shows the government is considerate of buyers’ sentiments and expectations and supports the sector’s overall growth, significantly contributing to India’s GDP and future growth prospects,” said Mohit Kalia, Vice President (Sales) Raheja Developers. “Thus, the sector shall once again reap its benefits.”

Also Read: India’s IndiGo, ranked among ‘world’s worst airlines’ in survey, reacts sharply | Top 10 carriers

India’s retail inflation rose to 6.21% in October 2024 compared to 4.87% in October 2023, primarily due to rising vegetable prices. This ended up breaching the RBI’s inflation target limit.

‘However, Aditya Kushwaha, CEO and Director of Axis Ecorp said that 2024 in general has been a landmark year for luxury housing despite all these challenges due to “evolving aspirations and global lifestyle trends.”

This means the luxury real estate grew more in 2024-25 than the affordable segment.

He added that maintaining the repo rate “reinforces financial stability, a critical driver of real estate growth, particularly in the premium and luxury segments.”

Meanwhile, the GDP growth rate slowed down to 5.4% during the second quarter of the financial year 2024-25, compared to 8.1% in the second quarter of 2023-24, due to falling growth rate in manufacturing, consumption, and mining. The RBI even cut India’s 2024-25 GDP growth forecast to 6.6% from the earlier 7.2%.

Saransh Trehan, Managing Director, Trehan Group said that the policy decision supports GDP growth by “ensuring affordable home loan rates, which are crucial for driving real estate investments.”

He emphasized that this was particularly important in high-growth areas like the National Capital Region (NCR).

Also Read: EPFO 3.0 may allow ATM withdrawal of PF, scrap 12% contribution limit: Report

“Going ahead into the new year, we hope to see the RBI and the government continue to leverage the robust growth and potential offered by real estate and agriculture sectors in particular, via a combination of policy interventions and reduced rates to form a conducive eco-system for sustained and sustainable economic growth,” said Boman Irani, President, Confederation of Real Estate Developers’ Associations of India (CREDAI).

Despite the positive sentiment, the National Stock Exchange’s (NSE) Nifty Realty index dropped, closing 0.05% in the red at 1,073.90.