Steady growth in Q3 but India's housing market showing signs of plateauing: Knight Frank

The top 8 residential markets maintained sales momentum in Q3 2025, with a total of 87,603 housing units, recording a 1% year-on-year (YoY) growth despite the expectations of a correction, thus recording its fifth year of an upcycle in Q3, according to Knight Frank India's quarterly market update. However, experts say the residential market is now showing signs of plateauing. As sales momentum continued to stay steady, Q3 2025 registered an increase in prices across all the markets, while supply recorded at 88,655 units for the said quarter noted a 2% decline over the same time last year.

Macro fundamentals provided stability in the Q3 housing market, with inflation easing to 2.07% in August 2025 from 3.65% a year ago. "The RBI raised its FY 2026 GDP forecast to 6.8%, while the repo rate stood 1% lower compared to end-2024, boosting liquidity and sentiment in the real estate sector," the report said.

Among the top 8 cities, Mumbai continued to lead, with 24,706 units sold (+2% YoY), accounting for 28% of the overall sales. Chennai recorded the strongest growth at 12% YoY with 4,617 units, its highest sales since the pandemic. Other major markets like NCR (12,955 units) and Bengaluru (14,538 units) remained steady, while Pune was the only laggard, with sales declining by 8% YoY.

Housing Prices Continue To Rise; YoY Growth may be Plateauing

In Q3 2025, prices have continued to rise even as developers are increasingly introducing financing options, including bank tie-ups and subvention schemes, to stimulate sales. "Defying expectations of a correction, the residential market remained range-bound yet resilient in Q3 2025," the report said.

Premium housing sales, meanwhile, held firm as financing innovations, fiscal incentives, and buyer-focused measures continued to channel demand into higher-value segments. Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, "India’s residential market in Q3 2025 has demonstrated an impressive ability to sustain momentum, and the market is now in its fifth year of an upcycle. Consequently, Y-o-Y growth rate is beginning to rationalise, and we may be entering a prolonged plateau phase."

As per Baijal, within a volatile geopolitical environment, India’s macro conditions remain stable. "The rate cut of up to 100 basis points, and liquidity support through the simplification of both direct taxes and GST have collectively strengthened end-user confidence. A notable outcome of this upcycle has been the surge in demand for premium housing, which has emerged as a key driver in recent years, reflecting the evolving aspirations of urban buyers for larger and higher-quality homes."

New Launches Drop; Premium Housing Shift Continues

India’s top eight markets saw 88,655 new units launched in Q3 2025, a slight dip of 2% YoY. Growth in new launches was led by Chennai (+44% YoY) and Bengaluru (+28% YoY). However, significant declines in Mumbai and NCR (-19% YoY each) constrained overall supply.

The quarter underscored the continued shift towards premium housing. Units priced below Rs 1 crore saw their share of sales drop to 48% in Q3 2025 compared to 54% in Q3 2024. By contrast, sales of homes priced over Rs 1 crore rose to 52% and grew by 15% YoY compared to a decline in ticket-size segments under Rs 1 crore. Within the premium segment, the strongest growth was noted in the category Rs 1-2 crore, which made up 28% of total sales. While on a low base, the best YoY performance was noted in the category of Rs 10-20 crore, which recorded a 170% rise in sales in Q3 2025 compared to the same period last year.

Inventory Up but Price Growth Healthy

The Quarters to Sell (QTS) – a key indicator of the health of the market -- remained steady at 5.8 quarters, equivalent to less than 18 months of stock currently available, signalling a healthy market. Even while unsold inventory rose 4% YoY to 5,06,400 units, the velocity of sales noted over the last 8 quarters indicates continued demand. The unsold inventory in higher ticket-size categories over Rs 1 crore, such as Rs 2-5 crore (+47% YoY) and Rs 20–50 crore (+19% YoY), has been notably higher than the lower end of the market. Luxury and super-luxury segments (>Rs 20 crore), though small in size (<1,500 units combined), displayed volatility in QTS, such as in the category of Rs 20-50 crore, the recorded QTS was of 14.4 quarters, while in Rs >50 crore, the QTS was recorded at 9.0.

Strong demand for premium housing supported healthy price growth across markets. Market activity remains concentrated at the top end of the market, while momentum persists in ticket sizes under Rs 1 crore. Price growth has been healthy in Q3 2025 despite overall sales not seeing any growth. The price growth has been strong in NCR, Bengaluru and Hyderabad at 19%, 15% and 13% YoY, respectively, the Knight Frank data shows.