India's Housing Market in 2025: EMIs Ease, Prices Rise — Implications for Homebuyers and Investors

India's residential real estate market in 2025 sees steady price growth, improved affordability, and rising demand for premium homes across major cities.

Real EstateHousing MarketEmiAffordabilityLuxury HomesReal EstateDec 22, 2025

India's Housing Market in 2025: EMIs Ease, Prices Rise — Implications for Homebuyers and Investors

Real Estate:As 2025 progresses, India’s residential real estate market is settling into a more measured phase. Interest rates have softened, demand has stayed resilient, and prices have continued to rise across most cities. For households and retail investors, the year so far highlights a shift: homebuying decisions are shaped by long-term affordability, location quality, and lifestyle value rather than short-term rate movements.

Affordability in 2025: EMIs ease, choices narrow

Housing affordability in 2025 improved marginally, driven by the Reserve Bank of India’s policy easing and the gradual transmission of rate cuts to home loans. According to Bhavik Bhandari, Chief Business Officer at Ashwin Sheth Group, softer rates materially helped borrowers. Citing industry data, he noted that in Mumbai, the share of income required for EMIs fell from 50% in 2024 to 48% in the first half of 2025, encouraging buyers who had postponed purchases due to high financing costs.

However, relief on EMIs coincided with rising property prices. Ankita Luharuka, CEO of Alliance City Developers, said affordability remained stretched in high-demand micro-markets where supply was tight, even as rising urban incomes partly offset higher costs. “Buyers became more disciplined about budgeting, choosing homes with long-term utility rather than aspirational amenities,” she said.

Developers across markets observed strong home-loan demand, particularly from younger first-time buyers. Vishal Vincent Tony, Managing Director at Aratt Developers and Ayatana Hospitality, noted that once banks passed on rate cuts, “fence-sitting borrowers returned,” especially salaried and tech-linked buyers seeking well-located, integrated homes that reduced daily commute and lifestyle friction. Still, for many first-time and mid-income buyers, higher down-payment requirements kept affordability constrained.

Ashish Raheja, MD and CEO of Raheja Universal, said while borrowing costs fell, entry prices rose faster in several locations, limiting broad-based relief.

Why prices rose: Demand yes, but selective

Residential prices increased across most Indian cities in 2025, supported by higher input costs, limited land availability, and sustained end-user demand. Data cited by industry executives showed price growth in nearly all major cities, with stronger momentum in Bengaluru, Chennai, and Kolkata, and more moderate gains in Mumbai.

Bhandari pointed out that nearly 50% of sales in the top cities during the year were in the ₹1 crore-plus category, reflecting a structural shift toward premium housing. “What we saw was value-led growth — fewer but pricier units — rather than volume-led expansion,” he said. Luharuka echoed this view, emphasizing that 2025 differed from earlier cycles because price appreciation was backed by genuine demand, not speculation. “Families prioritized space, connectivity, and delivery credibility. Even under-construction projects saw healthy absorption where trust and payment flexibility existed,” she said.

At the same time, the momentum was uneven. Raheja noted that some cities experienced a rise in unsold inventory in early 2025, underscoring that demand remained concentrated in the right product and the right location.

Luxury, design, and the lifestyle premium

The premium and luxury segments emerged as clear outperformers. Amit Jain, CMD of Arkade Developers, said sentiment improved sharply once the rate cut cycle began, prompting buyers in higher price brackets to move ahead with purchases. While prices continued to rise, the pace was steady rather than sharp, supported by limited supply and a preference for larger, better-designed homes.

In the ultra-luxury space, branded and design-led residences gained prominence. Sidharth Chowdhry, Managing Director at Dalcore, said buyers were drawn to globally inspired design, exclusivity, and long-term asset value. “Price appreciation in luxury remained steady because it was underpinned by end-user demand, not momentum buying,” he said.

A similar theme played out in premium lifestyle markets. Pavan Kumar, Founder and CEO of White Lotus Group, observed that for affluent buyers, affordability in 2025 was “redefined.” “It was less about price points and more about emotional clarity — homes that offered permanence, stillness, and design integrity,” he said.

2026 outlook: Stable rates, measured growth

Looking ahead, most experts expect 2026 to be a year of stability rather than sharp swings. Home loan rates are likely to remain stable or soften gradually, improving EMI visibility but offering limited scope for aggressive rate arbitrage. “Buyers should focus on long-term affordability instead of trying to time modest rate changes,” Luharuka said, adding that inventory levels are likely to remain balanced as developers launch projects more selectively.

Jain expects a more comfortable environment for premium buyers as rate cuts filter through, while sharp price spikes should ease with healthier inventory and more planned launches. Raheja believes pricing will rise at a moderate pace, led by infrastructure-backed and brand-led projects, while oversupplied areas may see slower growth. Emerging micro-markets and near-city hubs are also gaining attention. Saurabh Vohara, Founder and CEO of ALYF, said 2026 will mark a shift in how buyers evaluate homes — with greater emphasis on liveability, lifestyle value, and future connectivity. “People are choosing more balanced environments over the high-speed core of the city,” he said.

Frequently Asked Questions

How has housing affordability changed in 2025 in India?

Housing affordability in 2025 improved marginally due to the Reserve Bank of India’s policy easing and the gradual transmission of rate cuts to home loans. However, this was offset by rising property prices, particularly in high-demand micro-markets.

What factors contributed to the rise in residential property prices in 2025?

Residential property prices increased due to higher input costs, limited land availability, and sustained end-user demand. Cities like Bengaluru, Chennai, and Kolkata saw stronger price growth, while Mumbai experienced more moderate gains.

Which segments of the housing market performed well in 2025?

The premium and luxury segments performed well, with nearly 50% of sales in the ₹1 crore-plus category. Buyers were drawn to larger, better-designed homes and branded, design-led residences.

What is the outlook for the housing market in 2026?

Answer not available

How are emerging micro-markets and near-city hubs gaining attention?

Emerging micro-markets and near-city hubs are gaining attention as buyers increasingly prioritize liveability, lifestyle value, and future connectivity over the high-speed core of the city.

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