India's Housing Market Shows Signs of Slowing Down as Construction Lags: Liases Foras
India's residential real estate market is showing signs of peaking, with construction slowing and sales declining, according to Pankaj Kapoor, Founder and MD of Liases Foras.
Real EstateHousing MarketConstructionDevelopersLiases ForasReal Estate NewsNov 20, 2025
Kapoor noted that sales have already seen a marginal decline for four consecutive quarters, slipping 1–3% quarter-on-quarter. Overall, sales are down about 7–8% from their peak across 75 cities monitored by Liases Foras.
Kapoor stated that while developers are launching more projects than ever, construction is not keeping pace. The share of projects under construction has fallen from 65–75% earlier to nearly 50% in some cities, signaling labor shortages, approval delays, and funding issues.
This gap between launches and construction raises the risk of project delays, weaker cash flows, and margin pressure for developers. These issues are visible across both tier-1 and tier-2 cities, making it a pan-India trend, not a regional problem.
With construction costs rising faster than selling prices, developer margins may come under pressure. Kapoor also highlighted that price growth across residential projects has been extremely limited, even as construction costs continue to rise. Out of the 20,000 projects tracked by Liases Foras, less than 5% have seen prices rise more than 10%, while the majority have recorded only 0–5% appreciation.
With inflation running higher than price gains, developer margins are coming under pressure, and slower construction further delays revenue recognition. Kapoor warned that this combination could strain cash flows and increase execution risks. While RERA has reduced the chances of large-scale project defaults seen in the pre-2017 era, he stressed that construction activity must pick up meaningfully for developers to avoid delivery delays and potential execution challenges.
Frequently Asked Questions
What are the early signs of pressure in India's residential real estate market?
Early signs of pressure include a marginal decline in sales for four consecutive quarters, with sales down about 7–8% from their peak across 75 cities monitored by Liases Foras.
Why is construction not keeping pace with project launches?
Construction is lagging due to labor shortages, approval delays, and funding issues, which have reduced the share of projects under construction to nearly 50% in some cities.
How are rising construction costs affecting developers?
Rising construction costs are putting pressure on developer margins, as price growth across residential projects has been extremely limited, with less than 5% of projects seeing price increases of over 10%.
What are the potential risks for developers in the current market scenario?
Potential risks include project delays, weaker cash flows, and margin pressure, which could strain cash flows and increase execution risks.
How has RERA impacted the real estate market in India?
RERA has reduced the chances of large-scale project defaults seen in the pre-2017 era, but construction activity must pick up significantly to avoid delivery delays and potential execution challenges.
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