News: Unchanged repo rate lifts festive housing outlook, but affordability worries remain, experts say-05-08-2026
The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.25% on August 5, the fourth consecutive meeting without a change, citing volatile energy prices, supply disruptions linked to the West Asia crisis and wider geopolitical uncertainty. Real estate experts said the decision gives homebuyers and developers more certainty on borrowing costs, but warned that higher input and construction costs are likely to be passed on to buyers, pushing up apartment prices even if loan rates stay stable.
Experts said affordable housing is highly sensitive to interest rates, and with average residential prices in the top cities rising about 7% a year, rate stability alone will do little to improve affordability. They noted that the market’s resilience is coming largely from premium and luxury housing rather than the affordable segment that supports broad homeownership. Still, the decision is expected to help the market ahead of the festive season, traditionally the strongest period for sales, by nudging fence-sitting buyers to proceed and letting developers plan launches with more confidence. Steady rates are expected to support sales through the second half of 2026, especially in the mid-income and premium segments.
Anshuman Magazine, chairman and CEO for India, South-East Asia, Middle East and Africa at CBRE, called the hold a calibrated response to rising crude prices, food inflation and geopolitical uncertainty. He said predictable borrowing costs let buyers act on long-deferred purchases and help developers plan launches around the festive calendar.
CREDAI president Shekhar Patel said a stable interest-rate environment allows developers and buyers to plan with greater certainty, adding that the housing market has shown resilience despite supply-side disruptions from West Asia. Naredco president Parveen Jain said stable rates would sustain demand momentum and benefit construction activity, MSMEs, building material industries and the workers tied to them, including festive-season sales of under-construction homes.
Anuj Puri, chairman of ANAROCK Group, said the unchanged rate is a welcome signal but not enough to revive the mass-market housing cycle. ANAROCK data for Q2 2026 shows sales in the top seven cities fell 6% year-on-year to about 90,715 units, while affordable housing has dropped to just 6% of total launches even as overall new supply rose 7% to about 1.06 lakh units.
Consultants noted that H1 2026 residential sales were stronger both sequentially and year-on-year, so the status quo is positive for the sector for now. Lata Pillai, senior managing director and head of capital markets, India, at JLL, said rising construction costs passed on to buyers could hurt affordability, though attractive lending rates keep the market buoyant. Amit Goyal, managing director of India Sotheby’s International Realty, noted that this is the last policy review before the festive season, and said unchanged rates and easing crude prices should help sustain demand.
