India's Housing Market Sees a Cooling Trend in Q1 2025

India's housing market experienced a significant slowdown in Q1 2025, with sales dropping 28% year-on-year. However, luxury and ultra-luxury segments gained traction as developers shifted focus amid rising prices and global uncertainty.

Housing MarketReal EstateLuxury HomesIndiaEconomic TrendsReal Estate NewsJun 30, 2025

India's Housing Market Sees a Cooling Trend in Q1 2025

Real Estate News:India’s residential real estate sector has entered a recalibration phase in Q1 2025, following a prolonged bull run, as per ANAROCK’s latest report. While the housing market continued to perform above pre-pandemic levels, sky-high prices and global economic headwinds have dampened overall demand, causing home sales across India’s top seven cities to dip 28 per cent year-on-year.

According to the report, approximately 93,300 housing units were sold between January and March 2025, a sharp drop from over 1.3 lakh units in the same quarter last year. The substantial price hikes—averaging a 17 per cent rise across markets—have put affordability under pressure. The National Capital Region (NCR) and Bengaluru recorded the steepest year-on-year price increases at 34 per cent and 20 per cent, respectively.

Mumbai Metropolitan Region (MMR) and Pune, traditionally the strongest markets, accounted for over half of total sales in Q1. However, both experienced notable declines—MMR fell 26 per cent while Pune saw a steeper 30 per cent contraction. Hyderabad suffered the most severe drop, with a staggering 49 per cent plunge in housing sales.

Despite the slowdown in transactions, fresh supply remained resilient with about 1,00,020 new units launched during the quarter—down just 10 per cent compared to last year but 10 per cent higher than Q4 2024. Developers appear to be shifting focus toward high-margin projects: luxury and ultra-luxury segments together comprised 42 per cent of new launches, followed by 27 per cent in the premium range. Affordable housing accounted for just 12 per cent of supply, reflecting waning developer interest due to margin constraints.

City-wise, MMR led in new supply with 30,750 units, followed by Bengaluru (20,850) and Pune (16,850). Bengaluru stood out for its resilience, recording the smallest decline in sales at 16 per cent and a 26 per cent rise in new launches. However, its unsold inventory swelled by 28 per cent to nearly 59,000 units, indicating potential oversupply. In contrast, NCR registered a remarkable 52 per cent annual surge in new launches, driven largely by high-end and ultra-luxury developments. Hyderabad, however, reported the steepest fall in new supply at 55 per cent, suggesting a strategic pullback in response to market saturation and slowing demand.

Overall, available inventory across the top seven cities declined by 4 per cent year-on-year to around 5.6 lakh units, with Pune showing the healthiest absorption rate and the most significant drop at 16 per cent. Analysts interpret the current correction as a necessary breather following an overheated phase. “This is not a downturn but a recalibration. Developers are aligning supply with emerging demand trends and focusing on quality and profitability,” the report noted.

With continued demand from urban professionals and the rising appeal of premium lifestyle housing, the sector is poised for more balanced growth in the latter half of 2025.

Frequently Asked Questions

What is the main reason for the slowdown in India's housing market in Q1 2025?

The main reasons for the slowdown in India's housing market in Q1 2025 are sky-high prices and global economic headwinds, which have dampened overall demand.

Which cities recorded the steepest year-on-year price increases?

The National Capital Region (NCR) and Bengaluru recorded the steepest year-on-year price increases at 34 per cent and 20 per cent, respectively.

How did the luxury and ultra-luxury segments perform in Q1 2025?

Luxury and ultra-luxury segments gained traction, comprising 42 per cent of new launches, as developers shifted focus toward high-margin projects.

What is the current trend in new housing supply?

Fresh supply remained resilient with about 1,00,020 new units launched during the quarter, down just 10 per cent compared to last year but 10 per cent higher than Q4 2024.

What is the outlook for India's housing market in the latter half of 2025?

The sector is poised for more balanced growth in the latter half of 2025, with continued demand from urban professionals and the rising appeal of premium lifestyle housing.