Surprise Tariff Hike By US: Indian Real Estate, Homebuyers May Feel The Heat

The imposition of extra tariffs by US President Donald Trump on Indian goods will likely disrupt worldwide trade patterns. Though the immediate consequence will strike India's export-based industries, the resulting waves might trigger changes in investor confidence and increase production expenses while reducing foreign investment. The Indian real estate market, which is currently recovering cautiously, may not remain immune.

According to industry experts, while there appears to be no direct impact on the Indian real estate sector and the individual homebuyers as such, ripple effects of related sectors on the same cannot be ruled out.

“The affordable and mid-segment housing being primarily dependent on domestic inputs and labour may not be impacted due to the same. However, there may be several impacts on the high-end homes as well as homes in cities where the economy is largely dependent on the exports like IT, pharma, etc,” says Rajarshi Dasgupta, executive director - tax, AQUILAW.

Vinod PV, senior partner, IndiaLaw LLP, says that the imposition of 50 per cent US tariff on Indian exports may not directly impact homebuyers, but the resulting economic uncertainty and potential rise in construction costs—driven by a weaker rupee and costlier imported materials—could lead to higher property prices.

“This, coupled with cautious buyer sentiment and tighter household budgets, may affect affordability and delay purchase decisions, particularly among middle-income and first-time buyers,” he says.

The continuing global trade tensions together with the Trump administration’s tariffs could decrease the already-reduced production of affordable housing that began during the pandemic. The MSMEs represent the primary group that affordable housing targets and these tensions mostly affect them.

Says Anuj Puri, chairman, Anarock Group: “Homebuyers nowadays base their decisions mainly on extended market assurance instead of immediate interest rate changes. During the forthcoming festival season developers will probably continue market activity through discounts and adaptable payment options to boost accessibility for sincere homebuyers.”

Some realty experts, however, see this as an opportunity.

“With tariffs roiling global markets, real estate is emerging as a safe haven for both domestic and non-resident Indian (NRI) investors. Unlike stocks or exports, Indian real estate—especially luxury and commercial segments—offers stability, income potential, and long-term value. We are seeing rising interest from dollar-earning NRIs who view this as a smart hedge in uncertain times,” says Sam Chopra, president and CEO, eXp Realty India.

Here's how the real estate sector will get impacted by the recent hike in US tariffs:

Negative impacts:

• Tariffs can trigger a weaker rupee and push up the price of imported materials (steel, elevators, HVAC systems, smart home tech used in high-end housing) and the developers building high-end housing may pass on costs to buyers.

• Homebuyers in cities like Mumbai, Bengaluru, Gurgaon, where high-spec finishes are common, could see price increases of 2–5%.

• Tariff-induced cost spikes may force developers to delay or stall ongoing or upcoming projects resulting in delivery delays.

• For buyers with EMIs running on yet-to-be-delivered units, this means financial strain. Negative economic news can reduce confidence. Buyers may delay big-ticket purchases like homes.

• IT layoffs or slowdowns could hit buyer confidence; possible price corrections for cities where IT sector is a dominant player

Positive Impacts:

• If the economy slows due to reduced exports and uncertainty, the RBI may keep interest rates low to stimulate growth a possible silver lining for homebuyers: EMIs may not rise and financing could stay relatively cheap.

• A weaker rupee (which often follows trade tension) makes Indian real estate more attractive for NRIs which was the case even during the COVID era.

• This can increase demand for premium properties in cities like Hyderabad, Mumbai, and Bengaluru. This might push luxury property prices higher in NRI-heavy zones, indirectly affecting local high-end buyers.

• U.S.–India branding collaborations—particularly Trump-branded ultra-luxury projects in Gurgaon and Delhi—are holding up well on the sales front even after the tariff announcement. However, the longer-term brand appeal could be vulnerable if trade tensions or political rhetoric intensify, potentially affecting buyer sentiment.

In essence, "the impact seems to be a mixed bag where the role of government is extremely important to ensure the necessary push in case of a possible slowdown with extensive measures on the financial front to ensure liquidity and borrowing costs remain at an optimum level for long-term growth," says Dasgupta.