Stories
RBI Repo Rate Hike Won't Hit Housing Market Immediately Says JLL
- •The Reserve Bank of India’s 25-basis-point repo rate hike is expected to have a minimal immediate impact on the residential real estate market.
- •Home loan rates remain competitive, with strong credit profile borrowers still able to access rates below 8 percent.
- •Affordable and lower-priced housing segments face greater vulnerability and pressure from higher EMIs compared to resilient premium homes.
- •Developers are dealing with higher construction costs, leaving them with limited room to absorb further cost increases indefinitely.
- •Industry experts view the rate hike as a calibrated tightening measure rather than a major market disruption.
Key Questions Answered
According to JLL's Rohan Sharma, the 25-basis-point repo rate hike is unlikely to have an immediate, significant impact on the residential real estate market. While existing floating-rate borrowers and new buyers may eventually face higher borrowing costs once banks transmit the hike, the timing near the festive season and competitive rates (with strong credit profiles still under 8%) should limit near-term disruption.
The affordable and lower-priced housing segments are expected to face greater pressure from higher interest rates, as buyers in these brackets already deal with stretched affordability and are more sensitive to rising EMIs. Conversely, premium home demand remains resilient because affluent buyers are better positioned to absorb increased borrowing costs.
Supply chain constraints and cost pressures have already driven up construction expenses, leading developers to pass some increases onto buyers through higher property prices. With limited room left to absorb further cost spikes, any additional rise in financing and construction expenses risks being transferred to homebuyers, which could eventually test housing demand.
