Home Loans Are Cheaper, Yet Home Sales Fall by 27% in Major Cities
Home Loans Are Cheaper, Yet Home Sales Fall by 27% in Major Cities
Despite RBI’s interest rate cuts, housing demand dips sharply in top Indian cities as affordability concerns and market hesitation prevail.
In a surprising turn, homebuyers are shying away from the real estate market despite home loans becoming more affordable in 2025. The Reserve Bank of India (RBI) has slashed the repo rate by 100 basis points this year, 25 bps each in February and April, followed by a 50 bps cut in June, bringing it down from 6% to 5.5%. As a result, most banks have lowered their home loan interest rates significantly. However, this relief hasn’t translated into a boost in housing sales.
According to a report by Anarock Research, housing sales across India’s top cities fell by 20% year-on-year in the second quarter of 2025.
The decline was especially steep in Pune and Hyderabad, where sales dropped by 27%. Mumbai Metropolitan Region (MMR) saw a 25% dip, while Delhi-NCR and Kolkata recorded drops of 14% and 23% respectively.
Even Bengaluru, typically a strong performer, witnessed an 8% fall in sales. Chennai was the lone exception, posting a modest rise in demand.
Industry analysts believe that despite cheaper loans, affordability remains a challenge. Many prospective buyers are still recovering from pandemic-era financial strain, and inflationary pressures are squeezing household budgets. Additionally, ongoing global economic uncertainty and job market instability have made people hesitant to make long-term financial commitments like home purchases.
Anarock’s report suggests this period of slowdown could push developers to rethink their pricing and launch strategies. With the festive season approaching, companies may introduce offers and flexible payment schemes to attract buyers and revive momentum.
While the current situation indicates a temporary slump, experts remain hopeful. As economic conditions stabilize, homebuyer confidence is expected to return in the latter half of the year.
