Home prices rise despite affordability worries; festive season may boost sentiment: Housing.com & ISB report

The All-India Housing Price Index (HPI) for 13 cities recorded a 14-point increase in June despite signs of demand slowing in the country’s second-largest employment-creating sector, according to a report by REA India and the Indian School of Business (ISB). The Index also experienced a sharp 8-point sequential rise, highlighting the ongoing momentum in price growth, the report stated.

The Housing Price Index (HPI), developed through a partnership between Housing.com, a real estate platform owned by REA India, and the Indian School of Business (ISB), monitors housing trends across 13 key cities: Ahmedabad, Bengaluru, Chennai, Faridabad, Gandhinagar, Ghaziabad, Greater Noida, Gurugram, Hyderabad, Kolkata, Mumbai, Noida, and Pune.

"India’s housing sector will continue attracting attention as it matures, despite trade uncertainties. Cost concerns remain, needing government support, but positive changes are emerging. Goods and Services Tax reforms are expected to improve affordability and support demand in the mid-segment, vital for India’s housing-for-all goal,” said Praveen Sharma, CEO, Housing.com.

The report highlighted that the NCR has solidified its status as India's leading housing market, registering an impressive 42-point annual growth in Q2 2025. Its strong performance is driven by high investor confidence, significant job growth in key sectors, and ongoing demand for premium residential areas. Both 2BHK and 3BHK segments are experiencing notable demand, especially in Noida, Greater Noida, and Gurugram.

Bengaluru maintains its role as a major growth hub, ranking second with a 24-point year-over-year increase in readings. This surge is primarily fueled by an influx of IT professionals, leading to steady expansion across different configurations, with premium segments at the forefront. Key localities such as Bengaluru South, Outer Ring Road, and other top areas have played a significant role in this growth, per the report.

Hyderabad ranked third, showing a 20-point increase annually, which highlights the city's steady growth. The market is driven by strong demand in various sub-markets, with areas like ORR West, Hyderabad West, and other prime localities experiencing significant price appreciation.

MMR remains highly attractive, even as India's most expensive housing market, with demand mainly in the luxury and ultra-luxury sectors. Limited land supply and high replacement costs in the city continue to drive prices upward, per the report.

Kolkata showed significant HPI growth, highlighting the city's increasing appeal to buyers looking for value and better lifestyle amenities. The market prefers compact configurations that match local affordability trends, stated the report.

Market outlook

The report indicates that worries about affordability, combined with the recent US tariffs on Indian exports, are expected to put additional pressure on home sales in the September quarter. However, in the mid-term, the market is positioned for continued growth, supported by stable monetary policy, government initiatives promoting homeownership and strong underlying demand.

The report also highlighted the outstanding performance of NCR, Bengaluru, and Hyderabad, indicating these markets are poised for continued growth. However, affordability issues persist in major cities, especially for mid-income buyers, due to increasing construction costs and income gaps. Tackling these challenges with targeted policies and innovative financing will be essential for maintaining long-term market stability.

The stable repo rate environment and supportive government policies continue to create a favourable backdrop for homebuyers, with financing costs staying manageable despite rising property prices. This balance between growth and accessibility will be crucial for the market's ongoing development, per the report.