While growth remains resilient, the impact of cost pressures has started to become visible and is likely to weigh in. Overall construction costs are already on the rise led by increasing material and labour costs, which may lead to workforce inadequacy and delayed project timelines. This rise in construction cost is likely to be ultimately passed on to homebuyers in the form of higher property prices, thus affecting affordable and middle-income housing segments. However, this will depend on the intensity and duration of the ongoing global headwinds. The likelihood of a potential rise in repo rate and hence home loan interest rates cannot be fully eliminated in the next few quarters.
While homebuyers are likely to assess their income visibility more stringently before purchasing homes, developers are expected to prioritise construction material adequacy, cash flow management and project execution in the near to mid-term.
Beyond the rate decision, the measures announced to encourage greater participation by NRIs, OCIs, and foreign investors in Indian financial markets are a significant positive for the broader economy. By facilitating higher overseas investments and enhancing the attractiveness of Indian debt and equity markets, these initiatives are expected to support capital inflows, strengthen investor confidence, and reinforce India’s position as a preferred global investment destination.
For the real estate sector, stronger economic sentiment and deeper engagement from the global Indian diaspora could translate into increased interest in residential assets. NRIs already account for a meaningful share of premium housing demand, and these measures are likely to further strengthen their confidence in India’s long-term growth story. Combined with a stable interest rate environment, this should provide continued support to housing demand across key residential markets.”