by THO
Niranjan Hiranandani, chairman of NAREDCO, the apex body for real estate developers, has said that the RBI interest rate cut would significantly benefit affordable housing and hopes that a 100 basis point reduction in the repo rate going forward will further boost the segment.
Hiranandani made these remarks during a panel discussion hosted by NAREDCO Next Gen on February 11.
“The most important thing which has happened, and I must signify that, is that the Reserve Bank of India (RBI) has finally recognised that we have inflation under control and food prices are not, they are supply-driven, and they are not going to be contained by interest rates. And the reduction of interest rates will bring affordable housing back,” Hiranandani said while speaking at a panel discussion on February 11.
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“So, I am looking at a reduction in bps by 100 points in the next one year. It has come down by 25 points and more 75 points in the next one year, which will push affordable housing to make a comeback to some extent,” Hiranandani added.
Under the new governor, Sanjay Malhotra, the RBI announced a 25 basis point repo rate cut to 6.25% on February 7 for the first time in nearly five years. The reduction is expected to relieve existing homebuyers by helping lower their equated monthly instalments on home loans and ignite overall homebuying sentiment.
Also Read: RBI Monetary policy: RBI’s decision to cut interest rates by 25 bps expected to boost housing demand
Share of affordable housing sales dips
Hiranandani’s statement also comes against the backdrop of declining sales of affordable housing in the country in the last five years after COVID-19.
According to ANAROCK, a real estate consultancy, the sales share of affordable housing fell to 18% in 2024 from over 38% in 2019. In 2024, affordable housing sales in the top seven cities declined by 4%, followed by the supply of affordable housing in major cities, which dropped to 17% in the first nine months of 2024.
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The decline in sales was attributed to a high base effect, a fall in launches, and an appreciation in price. The general and assembly elections and a slowdown in project approvals impacted the new housing supply. The combined impact of rising prices, higher home loan rates, and the relatively adverse effects of the pandemic in this sector persisted, suppressing demand, ANAROCK said in a report released in January 2025.
