India's Real Estate Market: Declining Units, Rising Values in 2025

India's USD 500-billion real estate market recorded its second straight annual drop in new home sales volume in 2025, as high prices continued to erode affordability. With sales volumes down 14 per cent this year, following a 4 per cent dip in 2024, real estate developers are now banking on a mix of lower mortgage rates, resilient GDP growth, and possible tax relief in the upcoming Union Budget to revive demand for residential properties in 2026 and restore confidence in the sector.

Builders, however, found some comfort in the value-wise growth of new home sales, driven by steep price appreciation in the post-pandemic housing cycle and a deliberate shift by builders toward luxury residences in pursuit of better profit margins. The divergence signals a deepening split in buyer behavior: while premium homes continue to attract ultra-rich investors and aspirational buyers, the entry-level and mid-income segments, traditionally the backbone of urban housing, remain under pressure.

Leading real estate consultant Anarock data showed that housing sales across seven major cities fell 14 per cent to nearly 5.96 lakh units this year, while sales bookings value rose 6 per cent to Rs 6 lakh crore. Anarock Chairman Anuj Puri told PTI, '2025 has just been one of those wild years, with geopolitical drama everywhere, layoffs hitting the IT world hard, no end to the tariff debate, all sorts of curve-balls keeping the market on edge.' He observed, 'One interesting shift was that the sky-high double-digit price jumps from past years cooled off to single digits this year.'

Realtors apex body CREDAI National President Shekhar Patel said housing demand remained resilient despite global volatility. The consolidation of housing demand towards big branded developers, a trend that kicked in a few years back, gained further momentum during 2025. Led by Godrej Properties, DLF, Prestige Group, Lodha Developers, and Signature Global, India's top-28 listed realty firms clocked sales bookings of Rs 92,500 crore during the April-September period of FY26.

Luxury housing continued its growth trajectory while the share of affordable homes in sales and launches slipped. Builders blame high land prices for their inability to develop inventories for the masses, termed as affordable and mid-income housing categories. Limited supply of units under Rs 1 crore is a factor that dragged overall sale volumes this year.

Unlike the housing vertical, India's commercial real estate performed exceptionally well with bumper leasing of office, retail, and warehousing spaces. As a result, Indian real estate attracted record institutional investments this year at USD 10.4 billion, a 17 per cent rise year-on-year, according to JLL data. Domestic and foreign investors pumped money into the property market, anticipating better returns. India's office market, witnessing a V-shaped recovery post-pandemic, received the maximum 58 per cent of institutional investments. Foreign firms looking to establish global capability centers are driving demand for conventional and managed office space in India, which offers skilled human resources and prime workspaces at a monthly average rent of just USD 1 per sq ft across major cities.

Leasing of industrial and warehousing spaces also grew to an all-time high across top tier-I, tier-II, and tier-III cities on better demand from companies engaged in light manufacturing activities, third-party logistics players, and e-commerce firms. Amid strong demand across all asset classes, many realtors tapped the capital market to raise funds to expand their businesses. Knowledge Realty Trust, sponsored by realty firm Sattva Group and Blackstone, raised Rs 4,800 crore through a REIT public issue. Business conglomerates Raymond Group demerged its real estate business to list it separately on bourses.

The year also saw the Adani Group winning a bid to acquire debt-ridden Jaiprakash Associates Ltd (JAL) through an insolvency process. Stuck buyers in Amrapali projects are getting possession of their flats in Delhi-NCR, but not much luck for those who invested in housing projects of Unitech, Supertech, and Jaypee Infratech.

Looking ahead, CREDAI President Patel expects 2026 to be a year of calibrated growth in the Indian real estate sector. 'The priorities are clear: smoother transmission of repo rate cuts, further simplification of GST, faster approvals, and improved access to long-term capital,' Patel added. CREDAI and NAREDCO—the two major industry bodies—reiterated their long-pending demand to revise the definition of affordable housing by enhancing the price cap to Rs 90 lakh from the current Rs 45 lakh. The GST on affordable homes is only 1 per cent, and consumers will benefit if the Rs 45 lakh price limit is enhanced.

That apart, the two associations are hoping that the upcoming Budget would provide some tax incentives to real estate companies for developing affordable housing projects. If these two demands are met in the Budget, the real estate industry strongly believes that housing supply and demand would rise significantly. Growth will also be supported by a strong economy and lower interest rates on home loans. The Reserve Bank of India (RBI) reduced the repo rate by 125 basis points this year. 'Looking ahead to 2026, a lot rides on some big moves, like the RBI easing up more on rates and developers keeping a lid on prices. With the economy looking pretty solid right now, if we see more repo rate cuts that bring down home loan interest, I can totally see demand roaring back to life in the year ahead,' Puri, the Anarock Chairman, concluded.