US-Iran Conflict Dampens India's Real Estate Market: Q1 2026 Housing Sales Drop 7%

In the first quarter of 2026, India's residential real estate market slowed down as global tensions, particularly the US-Iran conflict, negatively impacted buyers' sentiment. According to the latest report from ANAROCK Research, housing sales across the top seven Indian cities fell by 7% quarter-on-quarter (QoQ), indicating a temporary disturbance in a generally strong sector.

Sales dipped across major cities in Q1 2026. Approximately 1,01,675 units worth 1.51 lakh crore were sold, down from 1,08,970 units worth 1.60 lakh crore in Q4 2025. Homebuyers and investors remained cautious due to rising uncertainty.

The Mumbai Metropolitan Region (MMR) and Bengaluru accounted for nearly 48% of total sales. MMR led with 32,800 units, marking a 6% drop from the previous quarter. Bengaluru saw around 16,440 units sold, down 5%. Pune's sales fell by 10%, while the National Capital Region (NCR) dropped 8%. Hyderabad's sales remained flat, and Chennai experienced a sharp plunge, nearly 18% less than the previous quarter. Kolkata also declined by 8%. The slowdown was widespread across regions, with each city reacting differently but none escaping the pressure.

Despite the weakening of sales, developers remain confident in the long-term potential of the real estate market. The total new launches in Q1 2026 reached 1,26,265 units, a 2% increase over the previous quarter and a notable 26% increase over Q1 2025.

Hyderabad recorded the highest new launches, increasing by a significant 46% over the previous quarter. Bengaluru and MMR also saw an increase of 7% and 6%, respectively. In contrast, cities such as Pune, NCR, Chennai, and Kolkata experienced a decline in new launches.

Interestingly, prices in the residential market continued to rise, albeit at a moderate rate. On average, prices increased by 2% QoQ and 7% year-on-year (YoY) in the top cities. NCR and Bengaluru led in terms of annual price appreciation, growing by over 15% and 8%, respectively. This trend has been driven by the expansion of luxury and ultra-luxury products.

In terms of market segmentation, properties in the range of ₹1.5 crore to ₹2.5 crore emerged as the largest segment, accounting for 32%. Properties above ₹2.5 crore accounted for 20%, while mid-range properties in the range of ₹80 lakh to ₹1.5 crore accounted for 25%. Affordable housing, with properties below ₹40 lakh, continued to decline, representing only 10% of the market.

The widening gap between housing supply and sales has led to an increase in unsold inventory. The total unsold housing in the top seven cities crossed 6.01 lakh units by the end of Q1 2026. The total inventory rose by 4% QoQ and 7% YoY. Bengaluru saw the highest increase in unsold housing, with a 12% rise QoQ and a 24% increase YoY.

Industry experts attribute the slowdown to the global geopolitical situation and its impact on the economy. Anuj Puri, Chairman of ANAROCK Group, stated, “While India’s residential segment’s long-term fundamentals remain strong, the short-term tremors of the Iran War were clearly visible in the first quarter. The 7% dip in sales tracks the war-induced uncertainty, with sentiment and sales clearly affected by surging oil and construction prices, particularly in March. The decline also aligns with large numbers of prospective Middle Eastern homebuyers, who invest significantly in Indian real estate, hitting the pause button under the war cloud.”

He further added, “Another key trend this quarter is that new launches have started outpacing sales, reversing the post-pandemic pattern when sales were usually higher.”

While the current scenario reflects short-term caution, the long-term prospects for the real estate sector in India are promising. The country's economic indicators are strong, and the real estate sector is benefiting from urbanization and rising income levels. However, the rate and speed of the sector's recovery will depend on the resolution of global tensions and the restoration of economic stability.