RBI rate hike to raise borrowing costs, but West Bengal real estate demand resilient

The RBI's 25-basis point repo rate hike to 5.50 per cent, announced Wednesday, will translate into higher interest rates for housing and construction loans, industry representatives said. However, executives believe the impact on the regional property market will be limited.

Sushil Mohta, president of CREDAI West Bengal, acknowledged that the rate increase—the first since 2018—would raise borrowing costs for homebuyers and developers. "Interest rates of banks and financial institutions on housing and construction loans will increase, which will have some adverse impact on real estate," Mohta said.

Despite near-term headwinds, developers expect housing demand to remain steady. Siddharth Pansari, managing director of Primarc Projects, noted that home loans would become marginally more expensive but suggested the hike is unlikely to deter genuine homebuyers. "In Kolkata, people are buying homes with a long-term view, and their decisions are increasingly driven by the right location, better quality and the lifestyle a home offers," he said.

The optimistic outlook reflects confidence that fundamentals underpinning residential demand in West Bengal—including urbanization and changing consumer preferences—will outweigh the impact of higher borrowing costs on the market's trajectory.