Home Prices Surge in India Despite Affordability Concerns: Housing.com & ISB Report
The All-India Housing Price Index (HPI) for 13 major cities showed a significant 14-point jump in June, indicating strong momentum in price growth despite demand moderation. The report by Housing.com and the Indian School of Business (ISB) highlights the resilience of India’s housing market.
Real EstateHousing MarketHpiAffordabilityIndiaReal EstateSep 29, 2025
The HPI, a collaborative effort by India’s leading digital real estate platform Housing.com and the ISB, tracks housing trends across 13 major cities: Ahmedabad, Bengaluru, Chennai, Faridabad, Gandhinagar, Ghaziabad, Greater Noida, Gurugram, Hyderabad, Kolkata, Mumbai, Noida, and Pune.
Praveen Sharma, CEO of Housing.com, noted, “Short-term pressures from trade uncertainties notwithstanding, India’s housing sector will continue to attract attention and investment. While cost concerns do persist, requiring government intervention, some positive changes are already visible. For instance, Goods and Services Tax reforms are expected to improve affordability, supporting demand, especially in the mid-segment, a category crucial for India to achieve its housing-for-all goal.”
Shekhar Tomar, an assistant professor of economics and public policy at ISB, observed that pricing showed signs of relative stability during the June quarter. “India’s housing market exhibited resilience in Q2 2025, with strong demand particularly in the high-ticket 3BHK segment across NCR, Hyderabad, and Bengaluru. While year-on-year prices remain higher, Q2 witnessed relative stability, suggesting a short-term moderation. With the 100-basis point repo rate cut in the first half of 2025 and inflation under control, we expect demand momentum, especially for larger homes in metropolitan regions, to continue driving the market in the coming quarters,” Tomar explained.
Monthly HPI Movement Over The Past Year (All-India)
The HPI has shown consistent growth over the past year, with notable increases in several key cities. This trend reflects the resilience of the housing market and the ongoing demand for residential properties, despite affordability concerns.
Regional Highlights
The National Capital Region (NCR) has emerged as the top-performing housing market, leading with an exceptional annual growth of 42 points in Q2 2025. This growth is driven by robust investor confidence, strong job creation in key sectors, and a preference for premium residential corridors. Both 2BHK and 3BHK segments have shown remarkable traction, with most demand concentrated in Noida, Greater Noida, and Gurugram markets.
Bengaluru secured the second position with a 24-point YoY jump in the HPI. Driven by an influx of IT professionals, this market has shown balanced growth across configurations, with premium segments leading the pack. Areas like Bengaluru South, Outer Ring Road, and other prime localities have contributed significantly to this growth.
Hyderabad emerged as the third-highest performer, with a 20-point annual jump, reflecting the city’s consistent growth trajectory. The market benefits from strong demand across multiple sub-markets, with localities in ORR West, Hyderabad West, and other prime areas witnessing substantial appreciation.
The Mumbai Metropolitan Region (MMR) continues to attract substantial interest despite being India’s costliest housing market, with demand concentrated in the luxury and ultra-luxury segments. The city’s limited land availability and high replacement costs continue to support price appreciation.
Kolkata registered noteworthy HPI growth, reflecting the city’s emerging appeal among buyers seeking value and improved lifestyle amenities. The market shows a strong preference for compact configurations aligned with local affordability dynamics.
City-wise Monthly HPI Movement
The city-wise HPI movement reveals a diverse picture of growth across different regions. NCR, Bengaluru, and Hyderabad continue to lead the pack, while other cities like Mumbai, Kolkata, and Chennai also show significant growth in specific segments.
Configuration and Segment Trends
The luxury housing segment continues to perform strongly, with sustained demand from High Net Worth Individuals (HNIs), Non-Resident Indians (NRIs), and entrepreneurs. This segment benefits from wealth creation in India’s expanding economy and the desire for premium lifestyle amenities.
Larger homes (3BHK and above) remain highly sought after in metro markets, reflecting post-pandemic space requirements and evolving lifestyle preferences. However, tier-2 cities continue to show a strong preference for smaller, more affordable configurations, creating a well-balanced demand distribution across the country.
Market Outlook for 2025-26
Despite concerns of affordability and the recent imposition of US tariffs on Indian exports, which may strain home sales in the September quarter, the market is positioned for continued growth in the mid-term. Stable monetary policy, government initiatives promoting homeownership, and strong underlying demand will support this growth.
The exceptional performance of NCR, Bengaluru, and Hyderabad positions these markets for sustained expansion. However, affordability pressures in major cities, particularly for mid-income buyers, remain a key challenge due to rising construction costs and income growth disparities. Addressing these concerns through targeted policy interventions and innovative financing solutions will be crucial for sustaining long-term market health.
The stable repo rate environment and supportive government policies continue to provide a favorable backdrop for homebuyers, with financing costs remaining manageable despite rising property prices. This balance between growth and accessibility will be essential for the market’s continued evolution.
Configuration-Wise HPI (All-India)
The configuration-wise HPI provides a detailed breakdown of the housing market across different segments, highlighting the diverse trends and preferences in various regions of India. The luxury segment, larger homes, and affordable configurations all show distinct patterns of growth, reflecting the evolving needs and preferences of homebuyers.
Frequently Asked Questions
What is the Housing Price Index (HPI)?
The Housing Price Index (HPI) is a metric that tracks housing trends across major cities in India. It is a joint initiative by Housing.com and the Indian School of Business (ISB) and provides insights into the price movements and market dynamics of the real estate sector.
Which cities showed the highest HPI growth in Q2 2025?
The National Capital Region (NCR) showed the highest HPI growth with a 42-point annual increase. Bengaluru and Hyderabad also performed well with 24-point and 20-point annual jumps, respectively.
What are the key factors driving the growth in the luxury housing segment?
The luxury housing segment is driven by sustained demand from High Net Worth Individuals (HNIs), Non-Resident Indians (NRIs), and entrepreneurs. Wealth creation in India’s expanding economy and the desire for premium lifestyle amenities are key factors.
How are affordability concerns affecting the housing market?
Affordability concerns, particularly in major cities, are a key challenge due to rising construction costs and income growth disparities. Addressing these issues through targeted policy interventions and innovative financing solutions is crucial for sustaining long-term market health.
What is the outlook for the Indian housing market in 2025-26?
The market is positioned for continued growth in the mid-term, supported by stable monetary policy, government initiatives promoting homeownership, and strong underlying demand. However, affordability pressures and external factors like US tariffs may cause short-term strains.
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