NAREDCO Pushes for 6% Home Loan Rates as Housing Sales Plunge

India’s housing market is facing a major slowdown. The National Real Estate Development Council (NAREDCO) has called for urgent steps to reverse the decline. In the last quarter, housing sales fell nearly 20% in India’s top cities. The slowdown is mainly due to high property prices, slow salary growth, and uncertainty in the economy.

According to market reports, property prices rose sharply over the past 3 years, while income levels remained almost the same. This gap has made it harder for people to afford homes.

Appeal for Lower Home Loan Rates

To help revive demand, NAREDCO wants banks to cut home loan interest rates to about 6%. Currently, home loans start from around 7.5% to 8% across most banks. The Reserve Bank of India (RBI) has already lowered its repo rate by 1% since February, but this hasn’t been enough to lift buyer sentiment.

G Hari Babu, President of NAREDCO, stressed, “Interest rates on home loans should come down to around 6% to boost demand,” highlighting the urgency of making housing loans cheaper so that more people can buy homes.

Affordability Gap Worsens

The mismatch between rising housing costs and stagnant salaries has created an affordability crisis. In the last 3 years, housing prices have climbed significantly, making home ownership out of reach for many.

Adding to this problem, land prices have surged after the COVID-19 pandemic. Developers are struggling to keep project costs under control, which affects their ability to launch affordable housing projects.

Global Factors and Buyer Caution

The housing slowdown has also been influenced by global geopolitical tensions and economic uncertainties. Anarock, a real estate consultancy, said that housing prices in India’s top seven cities increased by 11% between April and June 2025. Despite this, sales dropped 20% to 96,285 units compared to 1,20,335 units sold a year earlier.

Some regions have seen sharper price hikes than others. For example:

• Delhi-NCR had the highest increase in housing prices at 27%.
• Bengaluru’s prices went up by 12%.
• Hyderabad saw an 11% rise.

Sales also fell significantly:

• Delhi-NCR: down 14%
• Mumbai Metropolitan Region: down 25%
• Bengaluru: down 8%
• Pune: down 27%
• Hyderabad: down 27%
• Kolkata: down 23%

Interestingly, Chennai was the only major city where demand grew during this period.

Current Home Loan Rates in 2025

Here are the starting home loan interest rates offered by popular banks:

• Kotak Mahindra Bank: 8.20% onwards
• Union Bank of India: 7.35% onwards
• Bank of Baroda: 7.50% – 9.20%
• Central Bank of India: 7.35% onwards
• Bank of India: 7.85% onwards
• State Bank of India: 7.50% onwards

As seen, most rates are still well above the 6% level NAREDCO is suggesting.

Sales Data and Price Trends

PropEquity reported that during April–June, housing sales fell to 94,864 units compared to 1,16,432 units in the same quarter last year. This follows a 23% decline in the previous quarter as well.

Read More: Best Oil and Gas Stocks in July 2025: CPCL, Oil India, MRPL and More - Based on 5-Yr CAGR!

Additional Measures Needed

NAREDCO is also pushing for policies that promote slum redevelopment to make more land available for housing. G Hari Babu believes that a combination of lower interest rates and new policies could create favourable conditions for both developers and buyers.

Conclusion

India’s housing market is under pressure from rising prices, slow income growth, and global uncertainties. NAREDCO’s demand to bring home loan interest rates down to 6% highlights the urgency of supporting buyers and reviving demand. To truly turn things around, policymakers, banks, and developers will need to work together and adopt bold measures to make housing more affordable and attractive for consumers.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.