RBI's
Repo Rate Pause & GST Cuts: Implications for Homebuyers
Anuj Puri, Chairman - ANAROCK Group:
RBI's decision to keep the repo rate unchanged at 5.5% maintains home loan EMIs at current levels, which helps sustain buyer sentiment but does not improve housing affordability. This stability means existing home loan borrowers won't see any immediate EMI changes, while new borrowers will find loan interest rates holding steady.
As per latest ANAROCK data, Q3 2025 residential sales in
India's top 7 cities dropped 9% year-on-year to 97,080 units, yet overall sales
value jumped 14% to INR 1.52 lakh crore, indicating demand shifted towards
premium and mid-segment homes.
However, the recent GST rate cuts provide significant relief. With GST on cement reduced from 28% to 18%, construction costs are expected to fall by 3-5%, potentially reducing home prices by 1-1.5% for buyers. This reduction could save homebuyers INR 1-3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high.
ANAROCK data shows that affordable
housing's share has declined from 38% in 2019 to just 18% in 2024, making these
GST cuts crucial for reversing this trend. The combination of stable interest
rates and lower construction costs creates a favourable environment for housing
demand, especially during the ongoing festive season.
