India's Housing Market Enters Phase of Normalisation in 2025

New Delhi: India’s residential real estate market appears to have decisively exited its post-pandemic surge phase, with housing price growth across the top eight cities slowing sharply to 6% in calendar year 2025, from a steep 17% rise in 2024, according to PropTiger.com’s latest annual report, Real Insight – Residential CY 2025.

The deceleration in price growth is not indicative of stress, but rather reflects a maturing market characterised by calibrated supply, disciplined pricing, and a gradual softening in transaction volumes after two years of exceptionally strong momentum.

From acceleration to consolidation

Between 2022 and 2024, India’s housing market witnessed a rare alignment of low interest rates, strong end-user demand, improving household balance sheets, and investor participation, leading to a double-digit price appreciation across most major cities. By 2025, however, the cycle began to turn.

Average prices across the eight cities rose to ₹7,874 per sq ft in 2025, up from ₹7,451 per sq ft in 2024. While prices continued to inch higher through the year—rising an average 8% between Q1 and Q4—the pace clearly moderated, signalling consolidation rather than further acceleration.

This cooling is visible across most markets, particularly those that had seen outsized gains a year earlier. Delhi-NCR, for instance, which recorded an extraordinary 49% jump in prices in 2024 driven by luxury-led launches and investor interest, saw growth moderate to a far more sustainable 6% in 2025. Mumbai Metropolitan Region (MMR) saw price growth slow sharply to 4% from 18% the previous year, reflecting consolidation in its premium-heavy market. Pune and Chennai—both of which had seen 16% price appreciation in 2024—saw near stagnation in 2025, with Pune registering just 1% growth and Chennai remaining flat.

Bengaluru, Hyderabad signal end-user strength

Against this broader slowdown, Bengaluru and Hyderabad emerged as relative outliers, underscoring the importance of end-user-led demand in sustaining price momentum.

Bengaluru recorded a 13% increase in average prices in 2025, higher than its 12% growth in 2024. Prices in the city rose sharply by 21% between Q1 and Q4 2025, taking average values to ₹9,500 per sq ft by year-end. This pushed Bengaluru past Delhi-NCR to become India’s second-most expensive housing market after Mumbai MMR. Hyderabad, meanwhile, saw prices rise 8% in 2025, up from 3% the previous year, reflecting improving absorption and steady demand from professionals and upgrade buyers.

The divergence suggests that cities with deeper end-user bases and employment-linked housing demand were better placed to absorb higher prices, even as speculative activity softened elsewhere.

Sales slow, but supply stays disciplined

The moderation in price growth coincided with a noticeable cooling in transaction activity. Residential sales across the top eight cities fell 12% year-on-year to 3,86,365 units in 2025, the lowest level recorded since 2022. The slowdown became more pronounced towards the end of the year. Sales in the October-December quarter declined 10% year-on-year to 95,049 units, marking the weakest quarterly performance since Q2 2023.

Yet, unlike earlier downcycles, the slowdown in demand has been met with restraint on the supply side. New residential launches fell 6% in 2025 to 3,61,096 units, the lowest annual supply since 2021. While Q4 2025 saw a marginal increase in launches, the overall approach remained cautious. This supply discipline has helped prevent a build-up of excess inventory.

Inventory remains in a comfort zone

According to the report, inventory overhang across the eight cities remained within manageable limits, indicating that supply has largely kept pace with demand. Unsold inventory growth was more visible in higher-ticket segments, where longer decision cycles and lower liquidity are typical.

“Mumbai MMR price trends through 2025 reflect consolidation in the premium market, while Pune and Ahmedabad remained broadly stable,” said Onkar Shetye, Executive Director, Aurum PropTech. “Overall, resilient pricing alongside moderating sales volumes highlights a disciplined, supply-calibrated market, where developers focused on protecting price integrity rather than chasing volume.”

He added that stable quarterly price increases and controlled supply additions ensured inventory levels remained well managed through the year, creating a stable pricing base heading into 2026.

What the data is really signalling?

Taken together, the 2025 data points to a structural shift in India’s housing market—from a phase driven by rapid price discovery and pent-up demand to one defined by sustainability and selectivity. Buyers appear more price-sensitive, particularly in markets that saw sharp appreciation over the past two years. Developers, in turn, are showing greater willingness to defer launches, maintain margins, and align supply closely with visible demand.

For policymakers and investors, the message is clear: the market is not cooling because demand has disappeared, but because it is becoming more rational. As India heads into 2026, the residential real estate sector seems set for a period of steady, measured growth—where stability, rather than speed, defines success.