India's Housing Market in 2025: Declining Volumes, Rising Values

India's residential real estate sector experienced a year of stark contrasts in 2025. According to the latest Anarock Research report, housing sales across the country's top seven cities—Mumbai Metropolitan Region (MMR), Pune, Bengaluru, Delhi-NCR, Kolkata, Hyderabad, and Chennai—declined by 14% year-on-year, dropping to approximately 3.96 lakh units from 4.59 lakh units in 2024. This slowdown was largely attributed to rising property prices, widespread layoffs in the IT sector, geopolitical tensions, and broader economic uncertainties that dampened buyer sentiment.

Despite the drop in sales volume, the total value of homes sold increased by 6%, climbing to over Rs 6 lakh crore from around Rs 5.68 lakh crore the previous year. This divergence highlights a clear shift toward premiumization: buyers favoured larger, higher-end properties, driving up average ticket sizes even as fewer units changed hands. Average residential prices across these cities rose by 8% to Rs 9,260 per square foot, with Delhi-NCR recording the sharpest increase at 23%.

City-wise trends revealed significant regional variations. The Mumbai Metropolitan Region, which accounted for the highest sales volume at around 1.28 lakh units, saw an 18% decline. Pune followed closely with a 20% drop, while Hyderabad experienced the steepest fall at 23%. Bengaluru and Delhi-NCR recorded more moderate declines of 5% and 8%, respectively, and Kolkata fell by 12%. Chennai stood out as the only city to post growth, with sales rising 15%.

The luxury and premium segments emerged as the key drivers of resilience in the market. Demand for and supply of high-end housing surged, continuing the post-pandemic preference for bigger, better-quality homes from branded developers. New launches across the top seven cities edged up by just 2% to about 4.19 lakh units, but a growing share—over 21%—was priced above Rs 2.5 crore, up from 18% in 2024. Around 40% of new inventory launched was priced at Rs 1.5 crore and above, with 10% exceeding Rs 4 crore.

In an insightful discussion on these trends, a senior executive of Anarock described 2025 as a 'year of contradiction.' He emphasized that while volume declined, the value growth—led notably by Delhi-NCR's 58% jump—reflected stronger demand in the luxury space. He pointed out that the industry is stabilizing after years of rapid growth, with Grade-A developers consolidating their positions through strong balance sheets and significant land acquisitions (around 3,300 acres in 2025, 60% for residential). He also addressed the impact of IT layoffs, noting that IT-driven cities like Bengaluru felt the pinch more acutely. However, he viewed these challenges—along with geopolitical tensions and AI-related job disruptions—as temporary headwinds. India's persistent housing deficit and the robust fundamentals of branded developers provide optimism for sustained value growth, though job prospects will remain crucial for long-term momentum.

This migration to higher price brackets has created a notable gap in the market: homes in the Rs 1 crore to Rs 3 crore range have virtually disappeared from prime urban locations where jobs are concentrated. This raises a pressing question — where will young professionals and first-time buyers go? High taxes (accounting for nearly 50% of project costs through various levies and approvals), rising input costs (steel, cement), and unchanged GST structures have made it challenging to deliver affordable or mid-segment housing profitably.

From a developer's perspective, representatives of real estate firms highlighted micro-market dynamics in MMR. They noted that while overall volumes softened, prime areas like BKC and Western suburbs showed strong responses, with over 50% of units sold in recent launches. They attributed rising sales values to escalated land acquisition and redevelopment costs, predicting continued price increases in luxury pockets unless disrupted by major global events.

One noted real estate firm of Mumbai also observed evolving buyer expectations: today's consumers, more travelled and aware, demand sophisticated amenities like Pilates studios and yoga spaces, extending decision-making timelines from one-two months to four-five months. This contributes to lower volumes but sustains high values, with developers shifting toward larger formats (e.g., 1,300–1,500 sq ft carpet 3BHKs) that align with demand.

The conversation underscored a broader 'K-shaped' recovery in the market: the upper segment thrives amid premiumization—a trend seen across industries—while mid- and affordable segments struggle due to elevated costs, post-pandemic income disparities, and the end of certain government incentives. Developers are naturally prioritizing high-demand luxury products to maintain profitability.

As 2025 draws to a close, India's housing market enters 2026 with mixed signals: persistent headwinds in job growth and affordability, balanced by tailwinds like strong developer fundamentals and enduring demand for quality homes. The trajectory will likely depend on factors such as potential RBI rate cuts and disciplined pricing, but the shift toward value-driven, premium real estate appears firmly entrenched.