By – Dr. Samantak Das, Chief Economist and Head – Research and REIS, India, JLL
The RBI’s decision to cut the repo rate by 25 bps is a powerful, proactive signal that strategically leverages India’s macroeconomic strength – a robust 8.2% Q2 GDP expansion alongside record-low headline inflation. This is not a reactive measure to a slowdown, but a confident and forward-looking deployment of monetary space to deliver a structural stimulus, ensuring the nation’s growth engine becomes more inclusive.
For the residential sector, this is a direct boost to affordability which has been a growing concern amid rising property prices. We have been observing price resistance in the affordable and mid-segment housing categories, with our estimates projecting residential sales in 2025 to be 8-9% down from last year’s robust 300,000+ units (in the top seven markets of India). Given the high penetration of external benchmark-linked loans, the transmission to homebuyers is expected to be quick, providing tangible EMI relief that directly addresses this affordability challenge. This move is the catalyst needed to revive purchasing power and activate the crucial segment of first-time affordable and mid-market homebuyers who have been waiting on the sidelines, transforming fence-sitters into active buyers. We anticipate this will not only invigorate demand in the top metro areas but also significantly boost the burgeoning housing markets in Tier 2 and Tier 3 cities.
For developers, this final easing bullet significantly lowers the cost of capital, encouraging accelerated execution of planned inventory, particularly in the affordable housing segment. This ensures that 2026 kicks off with renewed, broad-based residential momentum. On the commercial front, the lower cost of capital for developers encourages faster project completions and new launches. This aligns perfectly with the unabated expansion of Global Capability Centres (GCCs) and the government’s ‘Make in India’ initiative, ensuring supply can meet the high-velocity demand. Ultimately, this move underwrites a confidence-driven surge in real estate activity and enhances the long-term investment potential of the asset class for both domestic and global players.