India Realtors Expect Housing Demand to Stay Resilient Despite RBI Rate Hike Raising Borrowing Costs

• Indian real estate developers expect genuine homebuyer demand to remain resilient despite higher EMIs from the RBI rate hike.
• The 25-basis-point increase raises floating-rate home loan costs but is not seen as a structural demand disruptor.
• Affordability concerns are most acute for first-time buyers in the sub-Rs 50 lakh segment where EMI-to-income ratios are already stretched.

The Indian real estate sector's response to the RBI's 25-basis-point rate hike has been measured rather than alarmist. Developers and realtors, particularly those active in eastern India including West Bengal, maintain that end-user demand—driven by genuine housing needs rather than speculative investment—remains fundamentally intact. Their argument is straightforward: a 25bps increase in the repo rate, once transmitted through bank lending rates, adds approximately Rs 150-200 per month to the EMI on a Rs 30-40 lakh home loan. While incremental, this amount is unlikely to deter buyers who have already committed psychologically and financially to a purchase decision.

The concern is more acutely felt at the margins of the housing market—first-time buyers in the entry-level segment, typically purchasing properties in the Rs 25-50 lakh range with maximum mortgage leverage, where the EMI-to-income ratio is already near the upper bound of what banks will sanction. For this cohort, a higher EMI creates two adverse outcomes: some buyers no longer qualify for the required loan amount under RBI caps, and others choose to wait for property prices to correct or interest rates to stabilise before committing. This cohort is likely to be more materially impacted than premium and mid-market segments.

For listed real estate companies, the market impact of the rate hike will be differentiated by segment exposure and geographic mix. Developers with strong order books in premium residential—where buyers are less EMI-dependent—and in commercial real estate—where demand is driven by corporate expansion—are better insulated than developers concentrated in affordable housing. The REIT sector and commercial property-focused developers could actually benefit from the rate environment if rising yields increase the relative attractiveness of real estate assets. Active monitoring of new project launches and pre-sales booking data over the next two quarters will provide the clearest signal on whether realtors' optimistic demand assessments hold.

Source: Times of India / ET Realty