India's Housing Market Sees 7% Drop in Sales as Construction Falls Behind

India’s residential property market has witnessed a slowdown in sales volumes and growing execution pressure on developers, even as prices remain largely stable due to strong demand in the luxury segment, according to Pankaj Kapoor, Founder and Managing Director of Liases Foras - India's only non-brokerage real estate research company.

Kapoor said housing sales have dropped about 7% from their peak in early last year, while new project launches have continued at a faster pace than actual construction. “The construction is not keeping pace with the launch supplies,” he said, adding that developers are completing around 2 billion square feet a year, compared with 3–3.5 billion square feet of new supply introduced over the past three to four years.

This gap is creating structural stress for developers, as slower construction delays revenue recognition and raises interest and project costs. Kapoor said while transaction volumes are down 6–7%, market value has held up because demand remains skewed toward premium housing. However, he noted that prices have peaked in many locations and investor participation has declined.

“Luxury can’t continue to support the market all along,” he said, adding that demand will need to broaden across income segments. He said price growth in most cities is now in the 0–5% range, while some north Indian markets that earlier saw sharp increases are showing signs of plateauing as new supply enters. Kapoor said the situation is not uniform across regions. Delhi-NCR continues to have limited unsold inventory compared with the Mumbai Metropolitan Region, where unsold stock is close to 300,000 units. Delhi-NCR has about 60,000–67,000 unsold units.

However, he said volumes have fallen sharply in Pune and also declined in parts of Delhi, Ahmedabad, Chennai, and Hyderabad. He also pointed to early signs of price softening. Around 18% of projects tracked by Liases Foras during the quarter saw price cuts of up to 5%, he said, as developers tried to attract buyers through discounts and offers. “Builders are finding it difficult to entice the investors,” Kapoor said.

Kapoor said the current market is driven more by demand–supply dynamics after the Real Estate (Regulation and Development) Act (RERA). He said prices rose sharply in cities such as Noida, Greater Noida, and Ghaziabad due to supply constraints, which allowed developers to raise prices. Now, with new projects entering the market, builders are offering discounts to maintain cash flows and sales momentum. However, he does not see a major risk of a sharp price correction.

“We don’t see a big price correction risk,” he said, pointing to rental yields of around 3–4% in major cities, including Mumbai, which are supporting property values. Kapoor added that future price increases are likely to be moderate, and discounts are expected to remain limited.