Compact Homes Surge in Demand as Indian Housing Market Soars
Demand for 1-2 BHK homes in India has surged to 54%, driven by affordability and rising property prices. Pune and Mumbai lead the market, with significant year-on-year price increases.
Compact HomesHousing MarketProperty PricesReal EstateInfrastructureReal Estate MumbaiOct 06, 2025
The report found that overall housing demand grew 3.1% quarter-on-quarter (QoQ), even as supply expanded modestly by just 1% QoQ nationwide. On a yearly basis, however, new supply declined 4.5%, indicating that developers are still exercising caution amid rising input costs and delayed project approvals.
Pune emerged as India’s hottest housing market, recording a 41.4% year-on-year (YoY) jump in average residential prices. Mumbai followed with 29.6% YoY growth, while Greater Noida saw prices soar 27.3% YoY.
Under-construction (UC) projects outperformed ready-to-move (RM) homes in terms of price appreciation. In Pune, UC property prices rose 29.1% QoQ, nearly double the 15.8% QoQ gain for ready homes, suggesting that homebuyers are betting on future growth and infrastructure-linked gains.
The Delhi-NCR region stood out this quarter as the country’s most active real estate hub. Delhi recorded the strongest quarterly rise in demand at 10.3%, followed by Noida (+6.3%) and Greater Noida (+3.8%). Analysts attribute this surge to large-scale infrastructure projects such as the Dwarka Expressway, Delhi–Meerut RRTS corridor, and the upcoming Noida International Airport — all of which are boosting buyer sentiment and long-term investment confidence.
Bengaluru maintained steady growth, with demand rising 5.9% QoQ and prices climbing 3.9% QoQ, reflecting a healthy mix of IT-sector resilience and ongoing infrastructure upgrades like the Peripheral Ring Road.
Chennai, however, presented a contrasting picture. The city saw a 5.4% drop in demand QoQ, even as supply expanded 1.9%, pointing to a temporary mismatch between developer launches and buyer preferences.
The July–September 2025 quarter reinforced a fundamental market shift toward compact and mid-segment housing. While affordability constraints are shaping buyer behavior, infrastructure-led optimism and evolving consumer aspirations continue to fuel demand across key micro-markets. Developers who align product offerings with affordability and lifestyle needs will define the next phase of sustainable housing growth, said Sudhir Pai, CEO, Magicbricks.
The PropIndex Q3 2025 findings reaffirm that India’s residential market is entering a phase of measured growth, shaped by affordability, infrastructure expansion, and evolving buyer aspirations.
As compact homes gain ground and under-construction projects attract premiums, the balance between demand and supply will remain crucial in sustaining momentum. Looking ahead, housing activity is expected to be driven less by speculative trends and more by pragmatic, end-user decisions.
Frequently Asked Questions
What is the current trend in India's housing market?
The current trend in India's housing market is a shift towards smaller, more affordable homes, with a significant increase in demand for 1-2 BHK units. This is driven by rising property prices and affordability constraints.
Which cities are leading in property price increases?
Pune and Mumbai are leading in property price increases, with Pune recording a 41.4% year-on-year jump and Mumbai seeing a 29.6% increase.
How has the demand for housing changed in the Delhi-NCR region?
The Delhi-NCR region has seen a strong rise in demand, with Delhi recording the highest quarterly increase at 10.3%, followed by Noida (+6.3%) and Greater Noida (+3.8%).
What factors are driving the demand for compact homes?
The demand for compact homes is driven by affordability, practicality, and infrastructure-led optimism. Buyers are prioritizing homes that are more affordable and practical in a high-interest-rate environment.
What is the outlook for India's housing market in the coming quarters?
The outlook for India's housing market is one of measured growth, with a focus on affordability, infrastructure expansion, and evolving buyer aspirations. Housing activity is expected to be driven by pragmatic, end-user decisions rather than speculative trends.
Related News Articles
Real Estate Investment Trusts in India: Recent Regulatory Updates
SEBI introduces new regulations for Small and Medium Real Estate Investment Trusts, revises pricing methodology for privately placed Infrastructure Investment Trusts, and amends SEBI (InvIT) Regulations, 2014.
Oberoi Realty Gains NCLT Approval for Nirmal Lifestyle Takeover in Mumbai
Oberoi Realty has received approval from the National Company Law Tribunal (NCLT) to acquire Nirmal Lifestyle, solidifying its position in Mumbai's competitive real estate market. The acquisition includes a 20,262.24 square meters plot adjacent to Oberoi'
Mid-sized Developers Thrive in India's Reviving Real Estate Market
The Indian real estate sector is witnessing a significant upturn, and mid-sized developers are seizing the opportunity. These firms are focusing on niche developments and innovative strategies to carve out a strong market presence.
Bajaj Housing Finance Shares Drop 6% as 12 Million Shares Hit Market After Lock-In Period
Bajaj Housing Finance shares experienced a significant dip of 6% as the three-month lock-in period for anchor investors ended, leading to a surge in shares available on the market.
Maharashtra RERA Freezes Bank Accounts of Non-Compliant Developers
Maharashtra Real Estate Regulatory Authority (MahaRERA) takes strict action against non-compliant developers by freezing their bank accounts. This move is aimed at ensuring transparency and accountability in the real estate sector.
NoBroker’s Ambitious Leap into Conversational AI SaaS with ConvoZen.AI
India’s first proptech unicorn, NoBroker, has ventured into the highly competitive Conversational AI Cloud market with its new platform, ConvoZen.AI. This strategic move leverages NoBroker’s extensive experience in customer interactions to deliver advance