India’s housing market plateaus in 2025 at 348,000 units as premium homes take 50% share

India’s residential market, which peaked in 2024, appears to have plateaued in 2025, although volumes remained steady. Residential sales across India’s top eight markets stood at around 348,204 units, broadly in line with the previous year, registering a marginal decline of 1%, according to a latest report on H2 2025 performance of the real estate sector by consultancy major Knight Frank India.

The flagship report, India Real Estate: Office and Residential Market – July to December 2025 (H2 2025), noted that overall sales for the year remained broadly steady even as new launches declined 3% to 362,184 units across the top markets. The demand, however, continued to outpace sales, reflecting developers’ confidence. 

Among key markets, Mumbai made up 29% of all sales with sales of 97,188 units in 2025, with 1% growth YoY. The National Capital Region (NCR) registered a decline in sales of 9% YoY, with sales of 52,373 units in 2025, while new launches also declined 16% YoY in the same period. 

Notably, sales in H2 2025 stood marginally higher by 0.4% year-over-year (YoY) at close to 178,000 units. Despite volumes being largely comparable with those of the previous period, sales volumes in H2 2025 are the highest since the end of 2013.

“Market health remained stable, with the quarters-to-sell (QTS) ratio steady at 5.8 in H2 2025, signalling sustained absorption. Weighted average prices rose across all markets, led by NCR with 19% YoY growth. These trends underline the continued resilience and evolving dynamics of India’s residential real estate sector,” the Knight Frank report stated.

Explaining the reasons, Baijal says the market is transitioning from rapid expansion to a more calibrated trajectory, supported by strong household balance sheets and long-term urban fundamentals. “Importantly, manageable inventory levels and low quarters-to-sell reinforce that the residential sector remains active, disciplined and structurally balanced as it moves into 2026.”

Talking about reasons behind a steady phase in India’s residential market, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said 2025 clearly entered a phase of consolidation at elevated levels. “With around 3,48,000 homes sold during the year, demand has held steady after an exceptional multi-year run. This reflects genuine end-user depth rather than episodic spikes. At the same time, the affordable segment of units priced under Rs 5 mn has seen a gradual and consistent decline since 2018, both in the share and volume of sales, as rising land prices, construction costs and selective buyer behaviour weigh on demand.” 

Residential sales remain resilient

Mumbai, the country’s largest residential market, bucked the national trend and recorded a 1% YoY increase in sales, retaining its leadership position amid rising prices and limited land availability. A larger proportion of the sales happened in H2 2025, which recorded a 3% rise YoY. 

Chennai also saw a rise of 12% YoY in the number of units sold in 2025. In contrast, NCR saw sales decline by 9% YoY, largely due to elevated base effects and selective market activity in high-value corridors. Pune also reported a 3% YoY contraction, while Bengaluru remained broadly stable, supported by steady end-user demand and a balanced supply pipeline.

Residential price growth sustains

In terms of price appreciation, weighted average residential prices recorded strong YoY growth across key cities, led by NCR at 19%, followed by Hyderabad (13%), Bengaluru at 12%, and Mumbai at 7%. Knight Frank calls the price appreciation “a defining feature of the residential landscape in 2025”. 

Prices rose across the markets largely due to the launch of higher value properties across the markets, pushing the weighted average prices. “This upward movement was supported by sustained demand, rising construction and land costs, and an increasing concentration of launches in higher ticket-size categories,” the report adds.

Commenting on the real estate landscape in Delhi-NCR, Aakash Ohri, Managing Director & Chief Business Officer, DLF Homes, said NCR, led by Gurugram, continues to anchor residential demand. "Strong sell-outs in Gurugram, including Privana North, along with successes in markets such as Mumbai and Panchkula, reaffirm that well-planned products remain in demand. The entry of developers from other cities and regions also reinforces Gurugram’s position as a highly attractive and competitive residential market going forward."

Homes costing INR 1+ cr make up 50% of all sales in 2025

In 2025, properties priced above Rs 1 crore constituted around 50% of total residential sales across the top markets in 2025, registering a 14% year-on-year increase. In absolute terms, 175,091 units were sold in the Rs 1 crore-plus category during the year, underscoring the growing dominance of higher-value housing in overall market activity.

In contrast, the sub-Rs 50 lakh segment recorded a sharp contraction, with sales declining 17% YoY to 73,694 units, accounting for just 21% of total residential transactions in 2025. “This represents a significant structural shift when viewed in a medium-term context; for comparison, homes priced below Rs 50 lakh accounted for nearly 63% of total sales as recently as 2022.” 

The mid-range segment (INR 50 lakh to INR 1 crore) also witnessed moderation, with volumes declining 8% YoY, reflecting increasing polarisation within the demand spectrum.

Residential market becomes more polarised

The year 2025 saw a progressive thinning of activity at the lower end of the price pyramid, even as aggregate market health remains stable. While housing affordability improved across most major markets—enabling a sizeable cohort of buyers to move up the value curve—the residential market simultaneously become more polarised across price categories. 

Homes priced below Rs 1 crore, and particularly those under Rs 50 lakh, continued to face pressure through 2025, marked by a concurrent softening of demand and supply. Knight Frank says supply trends in this segment have largely mirrored subdued buyer interest, indicating an absence of speculative overhang. 

The key reasons for this divergence are multifaceted. At the upper end, improved affordability metrics, rising household incomes, and evolving buyer aspirations have reduced the need for compromise on housing quality, size, and location. “Many end-users are opting for better-quality homes at higher ticket sizes, accelerating the shift toward premium and mid-to-premium categories,” says the report. 

Conversely, the lowest income segments continue to face structural constraints. These are challenges in access to formal credit, buyer profiling limitations, and the limited availability of appropriately priced and economically viable housing stock in urban markets. 

Supply dynamics remained active through the year, with residential launches continuing to outpace sales in most cities. This led to a gradual build-up of unsold inventory, and market health indicators remained firm. The quarters-to-sell (QTS) ratio stood at 5.8 quarters, indicating efficient inventory take-up and sustained sales velocity despite higher absolute stock levels.

The current trajectory increasingly looks like growth is peaking while city and segment-specific nuances are emerging, says Gulam Zia, International Partner, Senior Executive Director, Research, Advisory, Infrastructure and Valuation, Knight Frank India. “Overall, manageable inventory levels and low quarters-to-sell underline a market that is active, disciplined, and structurally sound.”

In its outlook for 2026, the Knight Frnak report projects the residential sector stands at a possible inflection, where it remains to be seen if the “premium segments” will continue to support market volumes. “While rapid volume expansion may remain limited after two years of peak sales, stable absorption, selective price appreciation, and disciplined supply additions are likely to define market activity in 2026.”