India’s average home prices and rental costs are set to outpace consumer inflation this year, according to a recent survey. Real estate experts expressed that on one hand, stagnant wages and high unemployment rates have depleted the affordability of mid-income families; on the other, home prices have nearly doubled in the last 5–6 years.
While the country’s overall economic scenario remains positive, it is the rising housing prices that seem to be taking a toll on India’s residential market activity. Approximately 93,280 units were sold across the top 7 cities in Q1 2025, compared to over 1.30 lakh units in Q1 2024, says one of the industry surveys.
As per another industry report, housing sales in India’s top nine cities declined by 23%, while supply decreased by a whopping 34% in January–March 2025. Hyderabad recorded the highest 49% yearly drop in sales, while Bengaluru saw the lowest dip at 16%. New launches dropped 10% Y-o-Y, from approximately 1.11 lakh units in Q1 2024 to just over 1 lakh units in Q1 2025.
Latest ANAROCK data finds that the year’s first quarter saw sales drop 28% across the top 7 cities, compared to the same period in 2024. Around 93,280 units were sold in Q1 2025, in sharp contrast to the all-time high sales of over 1.30 lakh units in Q1 2024.
The data analytics firm PropEquity reported housing sales in Q1 2025 at 1,05,791 units, compared to 1,36,702 units in the same period last year. Except for Bengaluru and Delhi-NCR, all seven cities witnessed a decline in sales.
Housing supply, on the other hand, stood at 80,774 units in Q1 2025, down from 1,22,365 units in Q1 2024, marking three consecutive quarters of under-1 lakh units launched. Except for Bengaluru, all other 8 cities saw a decline in new supply in the first quarter, the report states.
Rising residential prices could temper demand in the long run due to growing affordability concerns. Additionally, each circle rate revision adds to the financial burden on homebuyers, as higher stamp duty and registration charges further strain the end consumer.
HOUSING SALES DOWNWARD TREND
Approx. 93,280 units were sold in Q1 2025 – a 26% decrease over Q1 2024. NCR, MMR, Bengaluru, Pune, and Hyderabad together accounted for 91% of sales in the quarter. Sales in top 9 cities stood at 1,05,791 units in Q1 2025 and supply stood at 80,774 units in Q1 2025, marking three consecutive quarters of under-1 lakh units launched. Only Bengaluru saw a rise in launches at 17%, thereby accounting for 25% of the total launches, while Hyderabad, Pune and Thane have seen continuous decline in supply after witnessing peaks in 2022 and 2023. They cumulatively saw 28,227 units of lesser supply in Q1 2025 with share dropping to 29% from 38% in Q1 2024.
- MMR saw the highest housing sales with approx. 31,610 units in Q1 2025, decreasing by 26% over Q1 2024 when approx. 42,920 units were sold.
- Pune saw approx. 16,100 units sold in Q1 2025, decreasing by 30% over Q1 2024 when approx. 22,990 units were sold.
- Bengaluru saw approx. 15,000 units sold in Q1 2025 - a 16% decline of against Q1 2024 when approx. 17,790 units were sold.
- NCR saw a 20% decline in sales – from approx. 15,650 units in Q1 2024 to approx. 12,520 units in Q1 2025.
- Hyderabad saw approx. 10,100 units sold in Q1 2025, a 49% decline over Q1 2024 when approx. 19,660 units were sold.
- Chennai saw approx. 4,050 units sold in Q1 2025 – a 26% decline over Q1 2024 when approx. 5,510 units were sold.
- Kolkata also saw sales decline by 31% – from approx. 5,650 units in Q1 2024 to approx. 3,900 units in Q1 2025.
The housing market is witnessing some correction after three years (2021, 2022, 2023) of record supply because of which absorption/sales is also on a declining trend. Rise in home prices and caution on the part of investors due to geo-political developments and certain weaknesses in the Indian economy have resulted in drop in sales.
RECENT POLICY CHANGE EFFECTS
A recent draft notification for Gautam Budh Nagar district outlines significant hikes in circle rates, affecting property prices across Noida, Greater Noida, and Jewar. Under the proposal, high-rise apartments in Noida may see a 20% increase, while Greater Noida is set for a 30% hike. The most substantial rise is expected in agricultural land prices, with Jewar facing a 70% increase, Greater Noida nearly 50%, and Noida 40%. According to Magicbricks Research, Noida and Greater Noida are already witnessing moderation in demand due to rising prices and limited supply. In Q1 2025 (Jan–March), Noida recorded a 12.5% quarter-on-quarter (QoQ) drop in residential demand, while Greater Noida saw a 10% decline in just three months. Meanwhile, property prices increased by 3.6% in Noida and 4.6% in Greater Noida, bringing the average price per square foot to INR 12,773 in Noida and INR 8,838 in Greater Noida.
Likewise, Maharashtra government’s decision to revise the Ready Reckoner (RR) rates with an average hike of 3.89% across the state and a 3.39% increase in Mumbai is a mixed bag for the real estate sector. While we understand the government’s need to align RR rates with market realities, the timing and scale of the hike, especially in high-density urban pockets like Thane (7.72%) and Solapur (10.17%), may have ripple effects on housing affordability and redevelopment viability.
Karnataka government too is planning to increase the guidance value of properties in an attempt to address a revenue shortfall. But as per officials such hikes are aimed at addressing existing pricing anomalies.
The developers governing body though considers these rates increase as a challenge, particularly in the affordable and mid-income housing segments, which are already feeling the strain of rising input costs and financing challenges.
No doubt, the increased ready reckoner or circle rates, also called guidance values may impact housing affordability, especially for first-time homebuyers who are already grappling with tight budgets. For developers, this increase translates into a direct rise in costs for premiums, FSI charges, and fungible components – all of which are calculated on RR values. This could constrain the viability of affordable housing projects and even some mid-income housing projects.
TRUMP TARIFF FALL-OUT
In response to US President Trump’s announcement of steep 26% reciprocal tariff on Indian imports and clamp down on immigration policies, the booming IT sector and some of the industrial segments seem to be the most effected. The ripple effects are seen in the real estate sector too. With American companies tightening spending, Indian IT firms face slower project cycles and reduced revenues.
Pointing out the possible impact as fallout from US President Donald Trump’s recent tariff war, a chartered accountant warned that a recession in the US may trigger a domino effect in the real estate sector in IT cities like Bengaluru and Pune.
As per CA Paaras Gangwal, “Real estate market of cities such as Bengaluru, Pune, Hyderabad is linked with IT Sector. Recession in USA may impact real estate market of IT cities.”
The effects are visible with real estate markets of these cities, traditionally buoyed by robust demand from IT professionals, are experiencing a deceleration amid recent layoffs and hiring slowdowns in the technology sector, leading to a significant downturn in housing demand.
“This is a double-whammy: home prices will outpace inflation and rents have already been skyrocketing for years. For millions I think homeownership is becoming a distant mirage,” said Pankaj Kapoor, Managing Director, Liases Foras.
After a stellar run, the residential sector has entered a consolidation phase, with average deal size dropping to USD 117 million (Q2–Q4 FY25) from USD 233 million (Q1 FY23–Q4 FY25).
WHAT LIES AHEAD
Given the property market oversaturation, with available units exceeding actual demand, there are some reports that indicate the housing sector is experiencing a correction, after three years of record supply. At a time when input costs have already surged by 14-16% year-on-year, and financing remains tight, a balanced approach to ensure long-term affordability and sustained growth in the housing sector seems to be the only way forward.
Developers are pinning their hopes on the upcoming festive period, for positive sentiments among consumers. To make the most of the festive time, developers are coming up with an array of festive offers, in a hope to see a surge in sales across all projects, be it affordable, mid-income, premium or uber-luxury.
With the festive season on the anvil, the timing of this hike could slow down the momentum and impact both supply and demand. The additional pressure may deter potential homebuyers, express the developers.
