India's Housing Market Plateaus in 2025 with Premium Homes Dominating

India’s residential market, which saw a peak in 2024, appears to have plateaued in 2025, although volumes remained steady. According to a report by consultancy firm Knight Frank India, residential sales across India’s top eight markets stood at around 348,204 units, broadly in line with the previous year, registering a marginal decline of 1%.

The flagship report, titled “India Real Estate: Office and Residential Market – July to December 2025 (H2 2025),” noted that overall sales for the year remained steady, even as new launches declined by 3% to 362,184 units across the top markets. Despite this, demand continued to outpace sales, reflecting developers’ confidence.

Among the key markets, Mumbai accounted for 29% of all sales with 97,188 units sold in 2025, marking a 1% year-over-year (YoY) growth. The National Capital Region (NCR) saw a decline in sales of 9% YoY, with sales totaling 52,373 units in 2025, while new launches also decreased by 16% YoY in the same period.

Sales in H2 2025 stood marginally higher by 0.4% YoY at close to 178,000 units. Despite volumes being largely comparable to those of the previous period, sales volumes in H2 2025 are the highest since the end of 2013. The market health remained stable, with the quarters-to-sell (QTS) ratio steady at 5.8 in H2 2025, signaling sustained absorption.

Weighted average prices rose across all markets, led by NCR with a 19% YoY growth. These trends underline the continued resilience and evolving dynamics of India’s residential real estate sector.

Shishir Baijal, International Partner, Chairman, and Managing Director of Knight Frank India, explained that the market is transitioning from rapid expansion to a more calibrated trajectory, supported by strong household balance sheets and long-term urban fundamentals. “Importantly, manageable inventory levels and low quarters-to-sell reinforce that the residential sector remains active, disciplined, and structurally balanced as it moves into 2026.”

In Mumbai, the country’s largest residential market, sales increased by 1% YoY, retaining its leadership position despite rising prices and limited land availability. A larger proportion of the sales occurred in H2 2025, which recorded a 3% rise YoY.

Chennai also saw a rise of 12% YoY in the number of units sold in 2025. In contrast, NCR saw sales decline by 9% YoY, largely due to elevated base effects and selective market activity in high-value corridors. Pune reported a 3% YoY contraction, while Bengaluru remained broadly stable, supported by steady end-user demand and a balanced supply pipeline.

In terms of price appreciation, weighted average residential prices recorded strong YoY growth across key cities, led by NCR at 19%, followed by Hyderabad (13%), Bengaluru (12%), and Mumbai (7%). Knight Frank calls the price appreciation “a defining feature of the residential landscape in 2025.”

Prices rose across the markets largely due to the launch of higher-value properties, pushing the weighted average prices. “This upward movement was supported by sustained demand, rising construction and land costs, and an increasing concentration of launches in higher ticket-size categories,” the report adds.

NCR, led by Gurugram, continues to anchor residential demand. The entry of developers from other cities and regions also reinforces Gurugram’s position as a highly attractive and competitive residential market going forward, according to Aakash Ohri, Managing Director & Chief Business Officer of DLF Homes.

In 2025, properties priced above Rs 1 crore constituted around 50% of total residential sales across the top markets, registering a 14% year-on-year increase. In absolute terms, 175,091 units were sold in the Rs 1 crore-plus category during the year, underscoring the growing dominance of higher-value housing in overall market activity.

In contrast, the sub-Rs 50 lakh segment recorded a sharp contraction, with sales declining 17% YoY to 73,694 units, accounting for just 21% of total residential transactions in 2025. “This represents a significant structural shift when viewed in a medium-term context; for comparison, homes priced below Rs 50 lakh accounted for nearly 63% of total sales as recently as 2022.”

The mid-range segment (Rs 50 lakh to Rs 1 crore) also witnessed moderation, with volumes declining 8% YoY, reflecting increasing polarization within the demand spectrum.

The year 2025 saw a progressive thinning of activity at the lower end of the price pyramid, even as aggregate market health remained stable. While housing affordability improved across most major markets—enabling a sizeable cohort of buyers to move up the value curve—the residential market simultaneously became more polarized across price categories.

Homes priced below Rs 1 crore, and particularly those under Rs 50 lakh, continued to face pressure through 2025, marked by a concurrent softening of demand and supply. Knight Frank says supply trends in this segment have largely mirrored subdued buyer interest, indicating an absence of speculative overhang.

The key reasons for this divergence are multifaceted. At the upper end, improved affordability metrics, rising household incomes, and evolving buyer aspirations have reduced the need for compromise on housing quality, size, and location. “Many end-users are opting for better-quality homes at higher ticket sizes, accelerating the shift toward premium and mid-to-premium categories,” says the report.

Conversely, the lowest income segments continue to face structural constraints. These challenges include access to formal credit, buyer profiling limitations, and the limited availability of appropriately priced and economically viable housing stock in urban markets.

Supply dynamics remained active through the year, with residential launches continuing to outpace sales in most cities. This led to a gradual build-up of unsold inventory, and market health indicators remained firm. The quarters-to-sell (QTS) ratio stood at 5.8 quarters, indicating efficient inventory take-up and sustained sales velocity despite higher absolute stock levels.

The current trajectory increasingly looks like growth is peaking while city and segment-specific nuances are emerging, says Gulam Zia, International Partner, Senior Executive Director, Research, Advisory, Infrastructure, and Valuation, Knight Frank India. “Overall, manageable inventory levels and low quarters-to-sell underline a market that is active, disciplined, and structurally sound.”

In its outlook for 2026, the Knight Frank report projects that the residential sector stands at a possible inflection point, where it remains to be seen if the “premium segments” will continue to support market volumes. “While rapid volume expansion may remain limited after two years of peak sales, stable absorption, selective price appreciation, and disciplined supply additions are likely to define market activity in 2026.”