Higher interest rates can affect home loan repayments and purchasing decisions, but property demand is shaped by several factors beyond monetary policy. Employment prospects, household finances, connectivity and the long-term potential of emerging locations continue to influence buyer sentiment.
Harinder Singh Hora, Founder Chairman of Reach Group, said the repo rate increase came at a time when inflationary pressures had re-emerged, particularly because of rising and volatile crude prices. He said commercial real estate activity depends on the broader economic outlook and business expansion rather than interest rate movements alone.
“India’s economic growth remains resilient, and this continues to support business activity across major markets. Strong housing growth will also contribute to commercial realty growth as cities expand and new residential areas develop. Commercial real estate operates on long investment cycles, and we expect the underlying demand to remain steady despite the change in the interest-rate environment,” Hora said.
Commercial real estate demand remains closely linked to business expansion and the development of new urban centres. As residential catchments expand, they can create opportunities for offices, retail destinations and supporting commercial infrastructure. Meanwhile, residential property buyers are increasingly assessing homes on the basis of affordability, location, connectivity and their potential to deliver long-term value.
Amogh Bansal, MD of MUREC, said the residential market continued to attract steady interest from homebuyers despite the latest rate increase. He noted that buyers were considering infrastructure, connectivity and development quality alongside borrowing costs.
“The RBI’s decision to raise the repo rate by 25 basis points to 5.50% comes at a time when the residential market continues to see steady interest from homebuyers. While borrowing costs are an important part of a home purchase decision, buyers today are also looking closely at connectivity, infrastructure, quality of development and the long-term potential of a location. From a developer’s perspective, the focus remains on understanding these evolving requirements and bringing the right supply to the market. We believe the underlying demand for quality housing remains positive, and the current rate movement should be viewed as one of several factors shaping the market rather than in isolation,” Bansal said.
Saurab Saharan, Group Managing Director of HCBS Developments Ltd, said the residential market was in a different position from where it had been when interest rates were last increased more than three years ago. According to him, homebuyers have become accustomed to the prevailing interest-rate environment, while purchasing decisions continue to depend on household finances, financial planning and long-term requirements.
“The RBI’s decision to increase the repo rate by 25 basis points comes at a time when inflationary pressures and crude prices have moved higher. For homebuyers, however, the residential market is in a different position from where it was when interest rates were last increased more than three years ago. Homebuyers have become accustomed to the prevailing interest-rate environment, and a home purchase continues to be driven by factors such as household finances, financial planning and long-term requirements. A 25 basis point increase is therefore unlikely to change the broader direction of housing demand,” Saharan said.
Manoj Kumar Garg, Chairman of Northwind Estates, described the 25-basis-point increase as a shift from the rate stability seen through 2026. He attributed the move to renewed inflationary pressures and volatility in crude prices but said residential demand continued to receive support from economic confidence and housing requirements.
“The RBI’s 25 basis point increase in the repo rate marks a shift from the rate stability seen through 2026. The move comes in response to renewed inflationary pressures and volatility in crude prices. For residential real estate, however, demand continues to be supported by economic confidence and the need for housing. Homebuyers are taking a long-term view, and we do not expect this increase to change their decisions materially,” Garg said.
The revised rate environment has also brought the importance of financial planning into focus. Homebuyers need to account for repayment obligations, total acquisition costs and household budgets when evaluating a property purchase. However, interest rates remain only one component of the decision, with location, property quality and financial stability continuing to influence buyers.
Mohit Gawri, VP of Rise Infraventures Limited, said the rate increase reflected the RBI’s focus on maintaining economic stability as inflationary pressures evolved. He emphasised the importance of evaluating property fundamentals rather than basing decisions on a single policy change.
“The RBI’s decision to raise the repo rate by 25 basis points reflects its focus on maintaining economic stability as inflationary pressures evolve. From a real estate advisory perspective, this is a moment to keep the conversation centred on fundamentals rather than a single policy movement. Buyers should evaluate location, developer credibility, financing options and their own investment horizon. We believe well-chosen residential and commercial assets can continue to attract interest where the underlying value proposition is clear. Our role is to help clients make informed decisions, with realistic financial planning and a sharper understanding of each market’s opportunities,” Gawri said.
Rakesh Kaul, CEO and MD of Ralith Realty, said the return of inflationary pressures, particularly those associated with higher and volatile crude prices, had coincided with the RBI’s decision to raise the repo rate. However, he maintained that homebuyers continued to assess income, financial stability, location and housing quality when making purchasing decisions.
Kaul said, “The RBI’s decision to raise the repo rate comes at a time when inflationary pressures have returned, particularly due to higher and volatile crude prices. For housing, however, interest rates are only one part of the decision. Buyers continue to consider their income, financial stability, location and the quality of homes. With the festive season underway, we expect housing demand to remain healthy. The rate increase may raise financing costs, but we do not expect it to alter the broader residential market.”
The extent to which buyer interest translates into completed transactions will depend on affordability, confidence in project delivery and the perceived value of individual properties.
Karan Malik, Regional Director of Realistic Realtors, said the rate increase had made affordability and repayment planning more important for prospective buyers. He expected buyers to spend more time assessing financing options, while clarity on the total purchase cost and confidence in project delivery would remain central to decision-making.
“The RBI’s 25-basis-point increase brings affordability and repayment planning into sharper focus. Homebuyers may take more time to assess financing options, making clarity on the total purchase cost and confidence in project delivery increasingly important. We believe homeownership sentiment will remain positive, particularly among families buying for their own use. The central bank’s emphasis on price stability supports a sound economic environment over the longer term,” Malik said.
The real estate sector’s outlook remains linked to housing requirements, urban expansion and demand for quality developments. While the repo rate increase could prompt more measured financial decisions and raise borrowing costs, industry stakeholders expect the market’s fundamental drivers to remain resilient. The coming months, particularly the festive season, will provide a clearer indication of how buyer sentiment translates into property transactions, with affordability, credible project execution and long-term value creation continuing to shape the sector’s prospects.
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