Auto, realty companies expect sales rebound

Reduction in borrowing costs will act as a tailwind for discretionary demand

- PRACHI PISAL & ANJALI SINGH

The Reserve Bank of India's (RBI) decision to cut the repo rate by 25 basis points to 6 per cent has brought cheer to real estate and automotive industries, as reduction in borrowing costs will act as a tailwind for the sectors which have seen moderation in demand in recent months.

The real estate industry expects the move to revive subdued market sentiment amid moderating housing demand. As such, thanks to the rate cut, the industry is likely to attract first-time homebuyers with more affordable EMIs, as well benefit developers with improved liquidity conditions and smoother execution, causing improved cash flows. This would encourage them to launch more projects in the coming quarters to meet anticipated demand.

The timing of the rate cut is "critical," felt Samantak Das, chief economist and head of research and REIS, India, JLL.

The market was showing signs of fatigue after a record-breaking 2024, with sales in the first quarter of calendar 2025 declining by 12-15 per cent year-on-year (Y-o-Y). The average housing prices have also risen in Q1CY2025—between 10 and 34 per cent in the top seven cities, Anarock said. From ₹7,550 per sq feet in Q1CY2024, average prices collectively went up to ₹8,835 per sq ft in Q1CY2025.