Residential Real Estate: Navigating the New Normal in India's Housing Market

The residential real estate market in India is at a pivotal point. The strong post-pandemic demand and investor optimism have given way to a more nuanced and complex environment, shaped by structural forces and evolving buyer behavior. Insights from Signature Global, industry reports, and feedback from developers highlight a clear shift in market dynamics.

Signature Global has admitted that it will not meet its pre-sales target of ₹12,700 crore, a goal that seemed attainable just a few months ago. The overall market slowdown has impacted sales momentum. This straightforward disclosure from a prominent sector player has caused concern among listed real estate companies, leading to significant underperformance of the realty index.

Data from leading real estate consultants indicates a period of moderation rather than crisis. According to Knight Frank’s latest India residential report, total housing sales across the top eight cities dropped marginally in 2025, falling by about 1% to roughly 348,000 units. Concurrently, average prices continued to rise across key markets, with NCR up around 19%, Hyderabad 13%, Bengaluru 12%, and Mumbai and Chennai each around 7%. This suggests that while sales volumes are stabilizing, value growth remains intact, partly driven by high-end segments.

CBRE supports the view on luxury housing. Their India Market Monitor indicates that high-end housing represented a significantly larger portion of overall sales in 2025, with notable growth in luxury categories. The premium and luxury segments demonstrated strong year-on-year growth, reflecting a preference among investors and buyers for larger, well-appointed homes supported by quality infrastructure.

The premiumization of the market presents certain risks. Data from Anarock indicates that while the overall sales value increased by approximately 6%, volumes significantly decreased by around 14% in the top seven cities due to affordability pressures and reduced mid-market activity. The proportion of new supply in higher price brackets has risen, limiting the availability of affordable homes and further skewing the market towards higher ticket sizes.

Liases Foras reports a 7-8% decline in real estate volumes from previous peaks, attributing the drop to structural issues within the sector. In cities like Delhi-NCR, limited supply compared to regions such as the Mumbai Metropolitan Region is another challenge. NCR's housing supply is about one-fifth of MMR's, restricting options in one of India's most desirable homebuying areas.

While sales value remains stable due to luxury segments, this cannot indefinitely support the broader market if base demand continues to weaken. The report also highlights widespread price corrections, with approximately 18,000 out of 20,000 tracked projects experiencing developer-led price cuts, indicating efforts to stimulate demand.

Developers' perspectives reveal a range of sentiments. Prestige Estates acknowledges that demand continues across various regions, but emphasizes that product pricing is crucial, with overpriced inventory struggling, particularly if it lacks a clear value proposition.

Lodha notes ongoing industry consolidation and stresses the need for careful calibration of price increases to avoid dampening demand further. Mahindra Lifespaces reports early signs of moderation in certain micro markets, with NCR experiencing a significant slowdown and luxury segments losing momentum, while markets in Mumbai and Pune remain relatively stable.

Additionally, their comments on rising unsold inventory, increasing from about 13 months to 15 months, highlight the possibility of extending the timeline for sales.

According to consultancy data, the Indian residential market is moving from a post-pandemic surge into a more mature and stable phase. Knight Frank highlights that the initial spike in demand was due to pent-up needs, and now the market is stabilizing with a new balance in demand-supply dynamics.

The residential real estate sector in India is no longer experiencing the boom of the past few years. It is now entering a period of consolidation and adjustment, with growth becoming more measured. The success of developers will depend on their ability to respond to changing buyer demands, realistic pricing, and supply challenges. Companies that focus on sensible pricing, suitable housing, and a strong understanding of the market are likely to perform best in the coming years.