Bengaluru’s housing market is heading into FY26 with steady momentum, even as the mix of buyers and the types of homes they prefer continue to evolve. A new analysis by ICRA shows the city holding firm despite a sharp correction in the affordable segment, with mid-income and luxury housing now steering the growth story.
The city, which is the fourth-largest residential market among India’s top seven metros, accounted for roughly 14 to 15 percent of the total area sold between FY21 and FY25. This share reflects Bengaluru’s position as a stable, demand-driven market fuelled by IT-led employment, aspirational homebuyers, and a growing appetite for lifestyle-driven housing.
In FY24, Bengaluru clocked 102 million square feet of sales, recording an impressive compound annual growth rate of 27 percent over FY21-FY24. That pace eased slightly in FY25 when sales dipped 2 percent to 99 msf. The drop had less to do with weakening sentiment and more with a 41 percent plunge in the affordable housing segment, which now contributes only 6 percent to overall sales. Buyers at the lower end of the market have been squeezed by rising input costs, stricter lending norms, and stagnant incomes, pushing them out of active buying cycles.
On the other hand, the mid-income and luxury segments stayed resilient, each registering 3 percent growth in FY25. These categories continue to attract buyers upgrading for space, comfort, and better amenities, an ongoing trend since the pandemic reset expectations around home ownership.
The first half of FY26 suggests the market is regaining momentum. Sales touched 52 msf in H1, a rise of 14 percent year-on-year. ICRA expects the second half to hold steady, especially with a bulk of new launches lined up for the final quarter of the financial year. Developers appear to be timing projects around regulatory clarity and expected demand, especially in the premium bracket.
Launch activity itself is strong. Bengaluru saw 124 msf of new launches in FY25, a CAGR of 34 percent over FY21-FY25. For FY26, launches are expected to grow another 10 to 12 percent. This increase is backed by a combination of healthy inventory levels, rising demand for homes priced between Rs 2 crore and Rs 3.5 crore, and progress in the e-khata digitisation process, which has eased concerns around property documentation. In H1 FY26 alone, launches rose 7 percent to reach 63 msf.
One of the most striking signs of Bengaluru’s shifting buyer landscape lies in the Years to Sell (YTS) metric, which measures how long current unsold inventory would take to clear at existing sales velocity. YTS fell from 2.5 years in June 2020 to 0.8 years in March 2024, indicating robust absorption. Despite launches outpacing sales in FY25 and H1 FY26, the figure held steady at 1.1 years by March and September 2025. ICRA expects it to rise slightly to between 1.2 and 1.4 years by March 2026 as developers push out a larger pipeline of luxury homes, a segment that traditionally moves slower.
Buyer preferences have undergone a clear shift since FY23. While mid-income homes once dominated the market, demand has tilted towards larger, premium units. In fact, luxury launches overtook mid-income launches for the first time in H1 FY26. Luxury accounted for 49 percent of all launches, a sharp jump from 37 percent in FY25 and only 19 percent in FY21. Developers, however, may need to moderate their ultra-luxury pipeline if sales velocity continues to soften at the top end.
Bengaluru’s residential market, as the data shows, is changing shape. What remains constant is the city’s ability to absorb new supply, attract committed end-users, and draw developers who see long-term value in one of India’s most stable urban housing markets. As FY26 progresses, the balance between launches and sales, along with the performance of the luxury segment will determine how firmly the growth trend continues.
