Housing Prices Surge: NCR, Bengaluru, and Hyderabad Lead the Market Rally

Rising construction costs, limited land availability, and a growing preference for larger homes have driven housing prices up across major Indian cities, with NCR, Bengaluru, and Hyderabad leading the charge.

Housing PricesReal EstateNcrBengaluruHyderabadReal EstateSep 29, 2025

Housing Prices Surge: NCR, Bengaluru, and Hyderabad Lead the Market Rally

Real Estate:A confluence of rising construction inputs, constrained land supply in metros, and a sustained appetite for larger, premium homes has pushed housing prices higher across India — even as affordability pressures mount for mid-income buyers. The Housing.com–ISB Housing Price Index (HPI) shows the market’s momentum playing out unevenly across cities, with the National Capital Region (NCR), Bengaluru, and Hyderabad emerging as the strongest performers.

Three structural forces are driving the recent rise in prices:

Higher input and replacement costs. Developers are reporting escalations in materials and construction costs — a trajectory that the report flags as one source of persistent price pressure that could squeeze margins and limit new supply in affordable segments.

Limited developable land in top metros. Cities with constrained land availability — especially Mumbai and premium corridors in NCR and Bengaluru — are naturally seeing replacement-cost-led price support for launch and resale stock. This scarcity amplifies price moves when demand picks up.

Shift in buyer preferences to larger homes and premium product. Post-pandemic lifestyle changes continue to push demand up the configuration ladder: 3BHK and larger homes have recorded the sharpest gains across the 13-city HPI sample, pointing to both end-user upgrading and premium investor interest. The report’s configuration index shows 3BHK readings at the top end of the scale, with 2BHKs not far behind — a structural pattern that supports price growth in gravity centres for large-format homes.

On the demand side, the report also notes that investor and NRI interest — particularly in premium and luxury projects — has remained robust in several micro-markets, adding an upward bias to valuations where launch activity targets the upper segments.

Housing.com and ISB’s survey-based index (covering 13 cities) shows continuing upward pressure on prices. While the report contains locality and configuration heatmaps, the headline takeaway is clear: housing price momentum remains intact across major urban markets even as mid-segment affordability becomes a key challenge for sustained, broad-based demand recovery.

The report’s outlook flags two counters to near-term risk: a recent set of Goods & Services Tax (GST) reforms that, when passed through by builders, could modestly improve affordability; and the prospect of easier monetary conditions if inflation expectations continue to ease — both factors that could support festive-season demand. At the same time, the report warns that US tariffs on Indian exports and elevated input costs may weigh on sales and the affordable housing pipeline in coming quarters.

The HPI breaks out city dynamics in helpful detail; three clear leaders stand out:

NCR — the outperformer. NCR recorded the sharpest annual increase in the June quarter, driven by strong investor flows into premium corridors and healthy end-user demand for 2BHK/3BHK products in Noida, Greater Noida, and Gurugram. These micro-markets combine new-launch visibility with improved connectivity, making them prime beneficiaries of both homebuyers and portfolio investors.

Bengaluru — tech demand and balanced growth. Bengaluru posted sustained gains led by South Bengaluru, Outer Ring Road, and premium clusters. The city’s mix of IT-led job creation and new luxury and mid-premium launches has resulted in broad-based traction across configurations, with both 1BHK/2BHK rental demand and 3BHK upgrade flows visible.

Hyderabad — steady appreciation. Hyderabad continued to show healthy price appreciation, with ORR West and Hyderabad West proving strong demand centres. The city’s relatively balanced new supply and continued IT-sector employment growth underpin its performance.

Other trends by market:

MMR (Mumbai Metro Region) continues to be the most expensive market; limited land and high replacement costs sustain price support in luxury and ultra-luxury pockets.

Kolkata and several Tier-2 cities are showing selective appreciation driven by compact, affordable configurations — evidence that affordability still shapes demand in many regional markets.

The Housing.com–ISB Housing Price Index (HPI)’s configuration breakdown highlights a distinct pattern: 3BHK units recorded the sharpest annual price growth, followed by 2BHKs, and 1BHKs lagged but are still appreciating in many micro-markets. This tells a two-part story: first, aspirational upgrade demand and familial space requirements are driving upsizing in metros; second, smaller units remain important for rental and entry purchases, especially in price-sensitive locales. For developers, this underlines the need for a calibrated product mix that serves both upgrade-led metros and value-seeking regional markets.

Housing.com–ISB flags a handful of policy and financial variables that can materially alter near-term outcomes:

GST reforms (announced late September) — the report expects these to modestly boost buying sentiment and improve affordability if builders pass on benefits to buyers. That could help mid-segment volumes — the cohort most critical for sustained housing for all.

Monetary policy scope — with global and domestic inflation trends softening, the report outlines the possibility of a more favourable RBI stance later in the year. Easing financing costs would lower monthly EMIs and could amplify festive-season demand.

Input-cost and trade risks — the imposition of US tariffs on certain Indian exports is highlighted as a cross-cutting risk that raises material costs for developers and could reduce the flow of new, affordable units to market.

Price discovery at micro-market level. Expect sharper divergence between premium corridors (which could keep appreciating) and price-sensitive micro-markets where demand will depend on financing and last-mile affordability.

Product and price segmentation. Developers that can offer smaller-format, finance-friendly products alongside aspirational launches will be better placed to navigate a bifurcated market.

Festive season as a litmus test. If GST benefits and any rate relief translate into stronger launches and absorption during the festival window, the market’s growth story can broaden beyond the premium pockets.

India’s housing market in Q2 2025 demonstrates a resilient price trajectory shaped by input costs, land constraints, and an enduring shift toward larger homes — forces that favour premium and established growth centres such as NCR, Bengaluru, and Hyderabad. The near-term outlook is cautiously optimistic: policy reforms and potential easing in borrowing costs could broaden demand, but affordability challenges and input-cost pressures mean that the next few quarters will be a test of whether growth can become both wider and more inclusive.

Frequently Asked Questions

What are the main factors driving the rise in housing prices in India?

The main factors driving the rise in housing prices in India include higher input and replacement costs, limited developable land in top metros, and a growing preference for larger, premium homes.

Which cities are leading the housing price increase?

NCR, Bengaluru, and Hyderabad are leading the housing price increase, with NCR recording the sharpest annual increase in the June quarter.

How are buyer preferences affecting the housing market?

Buyer preferences are shifting towards larger homes and premium products, with 3BHK and larger homes recording the sharpest gains across the 13-city HPI sample.

What policy reforms could help improve housing affordability?

Recent Goods & Services Tax (GST) reforms and the possibility of easier monetary conditions if inflation expectations continue to ease could help improve housing affordability.

What are the key challenges facing the housing market in the next few quarters?

Key challenges include affordability challenges, input-cost pressures, and the potential impact of US tariffs on Indian exports, which could raise material costs for developers.