Residential Sales Surge to 15-Year High in July, Led by Premium Homes: HSBC Report
India's residential real estate market is showing promising signs of recovery, with July 2025 recording the highest sales in 15 years, driven by a strong demand for premium, large-sized apartments.
Real EstateResidential SalesPremium ApartmentsMarket RecoveryHsbc ReportReal Estate NewsSep 01, 2025
While the first quarter of FY26 was relatively muted, value growth picked up sharply in June 2025, driven by better realizations and a stronger premium mix. This momentum continued into July, which saw a 30% year-on-year (YoY) increase in both value and volume.
Importantly, July 2025 recorded the highest area sales for the month in 15 years, supported by new launches during Q1. HSBC noted that while part of this surge was aided by a low base effect following last year’s election disruptions, the latest trends may mark the early stages of a broader recovery.
Premium Apartments Dominate Demand
The report highlighted that premium, large-sized, and multi-bedroom apartments remain the backbone of market activity. 3-4 BHK units accounted for nearly 70% of total sales value in Q1 FY26, with steady growth across cities.
By contrast, sales of super-luxury 5-6 BHK apartments declined due to fewer launches—except in Hyderabad and Pune, where demand for larger formats held firm. Overall, premium apartments formed 67% of sales value in Q1 FY26, up from 59% in FY25, and now constitute over half of the market by area.
HSBC underlined this segment as a key driver for listed real estate developers, noting that both average realizations and apartment sizes remain near all-time highs.
Inventory Remains Manageable
Market inventory trends remain supportive, despite a slight rise in the “months of sales” metric to 19.3 months, up from 18 months a year ago. HSBC pointed out that while the months-of-sales figure ticked up, absolute unsold inventory—both in units and area—fell year-on-year, as launches were limited.
Notably, inventory in the 3-4 BHK segment rose in absolute terms, but its sales velocity improved, with months of sales coming down to 19.7.
City-Wise Trends
On a regional basis, NCR and Bangalore were standout performers. NCR, led by Gurugram, hit record highs in volumes over the last three months, surpassing the boom levels of 2011–13. Bangalore and the Mumbai Metropolitan Region (MMR) also posted their highest-ever July sales by area after a subdued FY25.
Hyderabad, which had seen a sharp decline last year, is showing signs of a turnaround, albeit from a weak base. The city, along with NCR, is witnessing a marked shift in buyer preference, with over 90% of demand coming from 3BHK and larger homes.
Bangalore also leaned heavily towards the premium segment, with approximately 80% of sales in 3BHK and above. Interestingly, NCR was the only market where demand grew across all apartment sizes.
MMR, meanwhile, retained its status as the most balanced market, with 3-4 BHK apartments comprising 48% of total absorption in Q1 FY26—a record high for the region in this category.
Conclusion
According to HSBC, the recent surge in absorption, combined with resilient pricing and favorable inventory dynamics, suggests that the Indian residential market could be entering a new growth phase after last year’s slowdown.
The premium and mid-to-large apartment categories are expected to remain the growth engines for developers, particularly in NCR, Bangalore, and MMR.
Frequently Asked Questions
What is driving the recovery in India's residential real estate market?
The recovery is driven by strong growth in premium, large-sized, and multi-bedroom apartments, particularly 3-4 BHK units, which account for nearly 70% of total sales value in Q1 FY26.
Which cities are performing the best in the residential real estate market?
NCR and Bangalore are standout performers, with NCR hitting record highs in volumes and Bangalore posting its highest-ever July sales by area.
How has the inventory trend affected the market?
While the months of sales metric has slightly increased to 19.3 months, absolute unsold inventory has fallen year-on-year, indicating a manageable inventory level.
What is the role of premium apartments in the market recovery?
Premium apartments form 67% of sales value in Q1 FY26, up from 59% in FY25, and are a key driver for listed real estate developers due to high average realizations and apartment sizes.
What are the expectations for the future of the residential real estate market?
HSBC expects the Indian residential market to enter a new growth phase, with the premium and mid-to-large apartment categories leading the recovery, especially in NCR, Bangalore, and MMR.
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