RBI Repo Rate Hike Likely to Have Limited Impact on Housing Demand: CREDAI-MCHI

 

Mumbai: The Reserve Bank of India’s 25-basis-point increase in the repo rate from 5.25% to 5.50% is expected to have a limited immediate impact on housing demand, although higher borrowing costs could influence affordability and purchase decisions, according to CREDAI-MCHI leadership.

Sukhraj Nahar, President, CREDAI-MCHI, said the rate hike was a measured adjustment and that underlying demand for homeownership remains healthy. However, he noted that buyers dependent on housing finance may become more conscious of financing costs, particularly during the festive season, which is traditionally an important period for housing transactions.

Sukhraj Nahar, President, CREDAI-MCHI

Rushi Mehta, Secretary, CREDAI-MCHI, said the broader economic outlook remains encouraging following the RBI’s upward revision of its real GDP growth forecast to 7.1%. With growth projected at 7.2% in Q2, 6.9% in Q3 and 6.8% in Q4, he said sustained economic activity, income generation and consumer confidence would continue to support real estate demand.

Rushi Mehta, Secretary, CREDAI-MCHI

According to Mehta, the strength of underlying housing demand should help the market absorb the rate adjustment, while maintaining affordability will remain important for sustaining housing consumption.

Jitendra Mehta, Senior Vice President, CREDAI-MCHI, said the Mumbai Metropolitan Region (MMR) continues to witness strong housing demand, supported by infrastructure expansion, improved connectivity and its long-term growth potential. He said the rate hike is unlikely to materially affect these fundamentals in the near term, particularly during the festive period.

Jitendra Mehta, Senior Vice President, CREDAI-MCHI

However, he cautioned that developers continue to face elevated construction and input costs, making the cost of capital an important consideration. A sustained increase in interest rates could put pressure on project economics and affordability, he said, while the MMR’s strong demand fundamentals and development pipeline continue to support the region’s growth prospects.