Housing Market Slows Down: Prices Soar While Home Buyers Hesitate
According to ANAROCK’s latest report, housing sales in India's top 7 cities fell by 20% over the past year, while average property prices increased by 11%. This trend highlights a significant shift in the real estate market, particularly affecting middle-class buyers.
Housing MarketReal EstateProperty PricesHome BuyersAffordable HousingReal Estate NewsJul 17, 2025
According to ANAROCK’s latest Q2 2025 PAN India Residential Market Viewpoints report, housing sales in the top 7 cities of India fell by 20% to 96,300 units year-over-year, while average property prices increased by 11%. These figures indicate a significant gap between prices and sales, signaling a major shift in the country’s real estate market.
While there was a slight 3% increase in Q2 2025 compared to the previous quarter, the year-over-year figures show a substantial decline. Cities like Mumbai and Pune experienced a 25-27% drop in sales, while Hyderabad and the National Capital Region (NCR) saw decreases of 27% and 14%, respectively. Surprisingly, Chennai recorded a 13% annual growth and a 40% increase from the previous quarter.
The most surprising trend is that while sales have fallen, prices have risen even faster. NCR recorded a 27% increase, followed by Bangalore with a 12% rise. Hyderabad, Chennai, and Pune also saw price increases ranging from 6% to 11%. The average property price across the country has risen from Rs 8,070 per sq.ft. to Rs 8,990, marking an annual increase of 11%.
Rising costs, high land rates, and the demand for premium homes are the primary drivers of this price surge. This situation has become extremely challenging for middle-class buyers, who are now either postponing their decisions or opting for smaller homes.
This divergence between sales and prices points to a larger shift in India’s real estate dynamics. While premium and luxury housing is booming, affordability is a significant challenge for the middle class. Builders are now targeting high-end customers rather than the middle class.
In Q2 2025, luxury housing (Rs 1.5–2.5 crore) accounted for 27% of all new launches, followed by high-end (Rs 80 lakh–1.5 crore) and mid-end (Rs 40–80 lakh) segments at 21% each. The ultra-luxury category (above Rs 2.5 crore) made up 19% of supply. In contrast, affordable housing (below Rs 40 lakh) saw stagnation, contributing only 12% to total new launches.
This trend makes it clear that developers are no longer interested in low-margin affordable homes. Despite lower sales and fewer new launches (down 16% YoY), available inventory across the top 7 cities fell marginally by 3% YoY to 5.62 lakh units. In markets like Pune, available inventory fell 15% YoY, and MMR recorded a 9% decline.
On the other hand, Bengaluru’s inventory grew by 30%, suggesting a temporary mismatch between demand and supply. This growth in inventory could indicate that the market is adjusting to the changing dynamics, but it also highlights the challenges facing middle-class buyers.
Frequently Asked Questions
What is the main reason for the decline in housing sales?
The main reasons for the decline in housing sales are the rapid increase in property prices, high land rates, and the demand for premium homes, which make it difficult for middle-class buyers to afford homes.
How have property prices changed in India's top cities?
Property prices in India's top cities have increased by 11% year-over-year. Cities like NCR have seen a 27% increase, while Bangalore has experienced a 12% rise. Other cities like Hyderabad, Chennai, and Pune have seen increases ranging from 6% to 11%.
Why are developers focusing on premium and luxury housing?
Developers are focusing on premium and luxury housing because these segments offer higher margins and cater to a growing demand from high-end customers, making it more profitable compared to the middle-class market.
What is the impact of the RBI's interest rate cut on the housing market?
Despite the RBI's interest rate cut by 100 basis points in the April-June 2025 quarter, it has not significantly impacted housing sales. The decline in sales suggests that other factors, such as rising property prices, are more influential.
How has the inventory of available homes changed in the top 7 cities?
The available inventory of homes in the top 7 cities has fallen by 3% year-over-year to 5.62 lakh units. Cities like Pune and MMR have seen declines, while Bengaluru has experienced a 30% growth in inventory.
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