Domestic housing market gets festive boost as demand rises 7%, will RBI repo rate hike put buyers on alert?

India’s residential real estate market is entering the crucial festive-season quarter with stronger demand and a sharp rise in new housing supply across major cities. However, the Reserve Bank of India’s (RBI) decision to raise the policy repo rate by 25 basis points to 5.50% could add a fresh layer of pressure on homebuyers as developers prepare for the traditionally busy October-December period.

According to NoBroker’s India Residential Real Estate Q3 2026 report, residential launches across six major metros rose 32% year-on-year to 69,718 units in Q3 2026, compared with 52,842 units in Q3 2025. Housing demand also strengthened, growing 7% YoY, up from just 3% in Q2, marking its strongest performance of the year.

READ THIS: RBI hikes repo rate: Will higher home loan costs take the shine off Navratri, Durga Puja, Diwali housing sales?

Festive season drives housing supply

The increase in supply is particularly visible in Maharashtra, where developers typically register projects ahead of Navratri and Diwali, when homebuyer interest tends to rise. Pune recorded a massive 643% YoY jump in launches, from 2,180 units in Q3 2025 to 16,192 units in Q3 2026 across 237 projects. The report said developers brought projects to market ahead of the festive season after holding back supply during 2025.

Mumbai Metropolitan Region (MMR) recorded 20,762 launches, the highest among the six markets, up 198% YoY from 6,967 units. However, the report noted that this largely reflected a weak base in Q3 2025 and projects being registered ahead of the festive period. MMR’s latest launch figure was broadly back to its Q3 2024 level of 20,937 units.

RBI rate hike adds uncertainty

The RBI raised the repo rate from 5.25% to 5.50% on October 7, its first rate hike in nearly four years, while shifting its policy stance from “neutral” to “calibrated tightening.”

DON'T MISS: Indian housing construction value jumps 83% to $430 billion amid demand boom: CREDAI-Anarock study

The move comes after the housing market benefited from lower home-loan rates over the past year. NoBroker’s report specifically attributed part of the 7% growth in housing demand to lower home-loan rates and changes in income-tax slabs, which improved buyers’ purchasing power.

The rate increase could therefore complicate the festive-season buying cycle. Any transmission of the higher policy rate into floating home-loan rates could increase borrowing costs for prospective buyers, although the actual impact will depend on individual lenders and the extent of rate transmission.

Prices continue to rise

Despite affordability concerns, residential prices increased across all six cities in Q3. Bengaluru recorded the highest price growth at 14.5%, with average prices reaching ₹11,293 per sq ft, up from ₹9,863 a year earlier. MMR followed with 8.9% growth and an average price of ₹15,672 per sq ft. Pune prices rose 7.7% to ₹8,622 per sq ft, while Chennai recorded 10.2% growth to ₹10,841 per sq ft.

NCR remains a key concern. Housing demand fell 9% in Noida and 8% in Gurgaon, while NCR prices still rose 10.6% YoY to ₹12,311 per sq ft. The report said high prices were constraining affordability and pushing developers towards relatively more affordable markets such as Ghaziabad and Faridabad.

ALSO READ: REIT payouts double to ₹3,136 crore: Is Indian commercial real estate becoming an income play?

What lies ahead

The festive quarter could therefore become a crucial test for India's housing market. NoBroker expects Pune and MMR to remain among the most active markets for new supply, while Bengaluru is likely to remain supply-constrained. NCR, meanwhile, is expected to remain more selective as affordability continues to weigh on demand.

With the festive season traditionally encouraging home purchases and developers launching new projects, the combination of 7% demand growth, 69,718 Q3 launches and a 25-basis-point RBI rate hike could make affordability and financing costs decisive factors for buyers in the months ahead