India's Residential Property Market Analysis 2025

The ongoing process of structural rebalancing towards higher-value properties supports the growth of sales prices and limits the supply of affordable homes in the Indian housing market, driving demand for rental alternatives in urban centers.

This extended overview from Global Property Guide covers key aspects of the Indian housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Investor optimism, combined with strong demand for premium properties, continues to underpin growth in India's residential real estate market. Preliminary data released by the Reserve Bank of India (RBI) in June 2025 showed that the All-India House Price Index rose by 3.13% year-on-year (0.25% inflation-adjusted) in Q4:2024-25, ending March 2025. On a sequential basis, the index registered a 0.92% increase (1.79% inflation-adjusted).

India's house price annual change:

Note: India (National) House Price Index: All Dwellings, 10 Major Cities Average (November 2010=100).
Data Source: National Housing Bank.

Average property values across major Indian cities also recorded steady growth, though at a moderated pace, according to research by Housing.com. Five of the eight cities covered in the analysis reported single-digit annual price increases, while Bengaluru led with a sharp 14% rise year-on-year, followed by Delhi NCR (11%) and Hyderabad (10%).

According to JLL, the ongoing momentum is largely being driven by the premiumization of housing. "Strong absorption of quality launches has tightened inventory significantly [in the high-end segment], pushing prices higher and prompting developers to launch new project phases at premium pricing," the firm noted in its latest quarterly market overview.

Average residential property price per square foot in key cities:

Looking ahead, experts anticipate that home prices will accelerate beyond earlier expectations, fueled by strong demand from affluent buyers. At the same time, a shrinking supply of affordable housing is likely to keep a large segment of buyers dependent on increasingly expensive rentals. Avneesh Sood, director at Delhi-based Eros Group, observed: "With the market leaning heavily toward premium and luxury homes, entry-level buyers are likely to be priced out, even with policies that look good on paper."

A Reuters survey conducted between August 14 and September 12 among 20 property market specialists forecasts that average home prices in major cities will rise by 6.3% in 2025 and 7.0% in 2026, up from earlier projections of 6.0% and 5.0% respectively. The sharpest increase in 2025 is expected in NCR (8.3%), followed by Bengaluru and Chennai (7% each), while Delhi and Mumbai are projected to see more moderate growth of 6.0% and 5.0%.

Analysts caution, however, that monetary policy easing has so far done little to improve affordability for lower-income households. Concerns persist about the market's growing dependence on the luxury segment, raising questions about the sustainability of price growth over the longer term.

Demand Highlights:

Sales Stabilize as Demand Shifts Toward Higher Price Brackets

Despite supportive factors such as interest rate cuts, stronger buyer sentiment, and steady economic growth, India's residential property market saw a moderation in demand during the first half of 2025, following several years of rapid expansion. According to Knight Frank, 170,201 residential units were sold across eight major Indian cities in H1 2025, reflecting a marginal year-on-year decline of 1.75%, and marking the first half-year contraction in sales since H1 2023.

The slowdown was concentrated in the lower price segments. Knight Frank data indicated that sales of homes priced below INR 10 million (USD 116,180) fell by 15% year-on-year, while transactions in the INR 10-20 million (USD 116,180-232,360) segment rose by 8%. The INR 20-50 million (USD 232,360-580,899) category recorded the sharpest growth, with sales increasing 29% over the same period. This shift underscores the structural rebalancing of the residential market towards higher-value properties: as of H1 2025, homes priced above INR 10 million accounted for 49% of total sales, up from 16% in H1 2018.

Note: Monitored markets include Mumbai, National Capital Region (NCR), Bengaluru, Pune, Hyderabad, Ahmedabad, Kolkata, and Chennai.
Data Source: Knight Frank Research.

Mumbai remained the country's largest residential market, contributing 28% of overall sales with more than 47,000 transactions, broadly in line with the previous year. In contrast, the National Capital Region (NCR) and Bengaluru posted year-on-year declines of 7.6% and 2.9% respectively, largely driving the overall dip in volumes. Knight Frank experts observed: "These markets also recorded the steepest price escalations in H1 2025, which weighed on homebuyer demand. Nevertheless, both NCR and Bengaluru continue to show strong momentum at the premium end of the market." By comparison, Chennai and Hyderabad were the only markets registering increases in residential sales during the same period.

Number of housing units sold in selected markets:

Market participants emphasize that the broader housing cycle remains on solid ground. Anuj Puri, Group Chairman of Anarock, described the current environment as a "phase of market recalibration rather than contraction." He added: "With India's GDP growth consistently outpacing global averages, rising disposable incomes, and accelerating urbanization, the fundamentals remain strong for a renewed growth cycle in the housing sector." Looking ahead, Anarock expects luxury and premium housing to continue driving demand through the second half of 2025.

Experts at Grant Thornton echoed this outlook, projecting sustained momentum in the residential market during FY 2025-26, led by mid-income and premium housing. However, they cautioned that affordability challenges could persist in the lower-priced segments, where the gap between supply and demand for affordable housing is expected to widen further.

Supply Highlights:

Developers Prioritize High-End Projects as Lower Segments Contract

Residential development activity moderated in the first half of 2025, reflecting a broader slowdown in housing demand. According to Knight Frank, 179,740 units were launched across India's eight major markets during the period, representing a 2.0% year-on-year decline. The contraction was concentrated in the lower-priced segment, with launches of homes valued under INR 10 million (USD 116,180) falling by 20% compared with the same period last year.

Developers continued to focus on the luxury segment, which has emerged as the fastest-growing category amid changing buyer preferences. Knight Frank's data shows that the share of homes priced above INR 10 million rose sharply, from 14.1% in H1 2018 to 56.4% in H1 2025. At the same time, the proportion of affordable housing units, defined as homes priced below INR 5 million (USD 58,090), dropped from 52.4% to just 17.1% over the same period.

This persistent mismatch between supply and demand in the affordable segment continues to deepen the shortage of low-cost housing. The current deficit is estimated at 9.4 million units and, with accelerating urbanization, is projected to widen to nearly 30 million units by 2030.

Note: Monitored markets include Mumbai, National Capital Region (NCR), Bengaluru, Pune, Hyderabad, Ahmedabad, Kolkata, and Chennai.
Data Source: Knight Frank Research.

Mumbai remained the largest contributor to new launches, accounting for 25% of the total, followed by Bengaluru at 19% and Pune at 15%. Among individual markets, Bengaluru posted the strongest growth at 31% year-on-year, while Kolkata registered the steepest decline, with launches down 29%.

Number of housing units launched in selected markets:

Since early 2022, the pace of new supply has consistently outstripped sales, resulting in a steady accumulation of unsold inventory. Knight Frank reports that inventory levels rose 4.49% year-on-year in H1 2025. While rising stock prices may raise concerns, sales momentum provides a more reliable indicator of market health. The Quarters to Sell (QTS) metric, which measures the time required to clear existing inventory based on the trailing eight quarters of sales, continued to show steady improvement. Despite higher inventory, QTS across the eight major markets has declined from 9.5 quarters in H1 2021 to 5.8 quarters (less than 18 months) in H2 2024, holding at the same level in H1 2025. This suggests that the market's underlying fundamentals remain stable despite the increase in unsold stock.

Residential market health in major markets, by city:

Looking ahead, JLL highlights that despite a slowdown in the number of new launches, developers are expected to continue prioritizing high-end projects in line with prevailing demand dynamics. According to its quarterly report, "Market supply should maintain momentum through premium developments by established players, increased institutional investment, and rising demand for tech-enabled modern homes."

Rental Market:

Moderation in Rental Growth Anticipated

The rental segment of the housing market in India has been surging in recent years, driven by urban migration trends, rental reforms under the Model Tenancy Act (introduced in 2019), and a shift towards luxury development on the supply side, which leaves many households in the middle- and low-income groups priced out of homeownership.

Summarizing the market dynamic, Ajay Sharma, managing director of Valuation Services at Colliers, noted that India's strong macroeconomic numbers have not benefited the population at the lower end of the pyramid, their stagnating disposable incomes leaving them at a disadvantage in terms of potential homeownership. "As affordability in both core and suburban areas is on the decline, more people are renting - and as more people rent, rentals have gone up," he said.

The April-June 2025 rental index report from the property platform Magicbricks points out that the rental sector continues to grow, as elevated sales prices nudge many potential buyers toward renting as a pragmatic interim solution. According to Magicbricks, demand-supply alignment in the sector translated into a 4.8% quarter-on-quarter and 29.6% year-on-year growth in rents. Among key submarkets, the strongest quarter-on-quarter escalations were observed in Navi Mumbai (19.4%), Hyderabad (11.5%), and Chennai (11.2%). The report, however, anticipates the recent surge in available rental supply (3% quarter-on-quarter and 16.3% year-on-year) will limit rent increases in the coming quarters: "With the supply of rental homes slowly starting to rise, we expect rents to rise at a slower pace over the medium term."

A similar tendency is outlined in the report from the property platform NoBroker, cited by The Economic Times. According to NoBroker, average rental inflation in India's six major metro areas (Bengaluru, Mumbai, Delhi-NCR, Hyderabad, Pune, and Chennai) in the first half of 2025 stood between 7% and 9%, a significant decline from the aggressive 12-24% annual hikes seen between 2021 and 2024. The driving factors behind this stabilization are new supply and improving infrastructure, which are creating more balanced demand-supply dynamics. However, micro-markets benefiting from new infrastructure projects still see strong rental growth. 

"India's rental housing market is entering a more mature and opportunity-rich phase after years of sharp, supply-driven inflation. Rental growth is now moderating <…> across metros, driven by infrastructure-led demand rather than broad-based spikes," commented Saurabh Garg, Cofounder and Chief Business Officer of NoBroker.

Considering these trends, local experts polled by Reuters in September 2025 project rents across India will continue to rise, outpacing consumer inflation, although growth expectations for the coming year eased to 5-8%.

In nominal terms, the research conducted by Global Property Guide in May 2025 found average asking rents in India's key urban submarkets at USD 69-156 for studio units, USD 107-387 for 1-bedroom units, USD 233-755 for 2-bedroom units, and USD 473-1,287 for 3-bedroom units. The corresponding gross rental yields averaged 4.89% nationwide, marginally down from 4.98% previously reported in September 2024. The highest potential performance for rental properties was estimated in Kolkata (6.32%) and Delhi (6.19%), while comparatively more expensive Mumbai market offered lower yields (3.61%).

Mortgage Market:

Interest Rates Reduced Modestly, Loan Stock Growth Continues

The Reserve Bank of India (RBI) previously reduced its policy rates by a cumulative 100 bps between February and June 2025, bringing the Policy Repo Rate to 5.50% and the Bank Rate to 5.75%. In the last several months, however, the regulator has maintained a neutral stance, not taking any further steps to adjust monetary policy.

After its most recent meeting, the RBI's Monetary Policy Committee noted that although there has been a significant moderation in inflation and macroeconomic conditions in the country opened up policy space for further supporting growth, the impact of prior policy actions and fiscal measures is still playing out, while external trade-related uncertainties are also still unfolding, justifying the regulator's decision to wait before charting the next course of action.

Local experts largely agree that further gradual policy easing can be expected in the coming months. "We believe the RBI can cut policy rates by 25-50 bps in the upcoming policies depending on growth [and] inflation dynamics," said Anurag Mittal, Head of Fixed Income at UTI AMC, as quoted by The Economic Times.

Data Source: RBI.

As Indian banks mostly have their floating-rate retail loans linked to the Repo Rate since October 2019, following the RBI policy rate cuts, major lenders passed on the reductions, with best home loan interest rates dipping below 8% for the first time since 2022. The adjustment was not universal, however, as some banks delayed reductions based on internal policies, and others even increased their home loan rates recently. For example, the State Bank of India (SBI) revised and raised some of its home loan rates effective August 2025. According to information accumulated by the fintech company Clear, as of September 2025, interest rates on home loans offered by major banks ranged from 7.35% to 13.20%, depending on the type of loan and borrower category.

"Banks are yet to fully transmit the earlier 100 basis points repo rate reduction, and [the pass-on] is expected to be completed soon in the ongoing festive season. This is expected to benefit the real estate sector, especially homebuyers in the affordable and mid-income segments," commented Vimal Nadar, National Director and Head of Research at Colliers India.

In general, India's residential lending market has undergone significant changes in recent years due to policy support through both demand- and supply-side interventions by the government, the establishment of the Real Estate Regulatory Authority (RERA), singular Goods and Services Tax implementation, stamp duty concessions, tax deductions on housing loans, and "Housing for All" (PMAY) subsidy scheme.

As a result, home loan originations have been growing in value consistently in recent years, although the growth rate for new credit has slowed from 18.8% in financial year 2022-23 to 9.9% in 2023-24 and 2.7% in 2024-25, indicating a potential plateau in lending expansion, noted the credit bureau CRIF High Mark in their latest report on the lending landscape in the country. According to CRIF, a total of 3.47 million new loans amounting to INR 10.7 trillion (USD 123.7 billion) were granted between April 2024 and March 2025, 42.9% of the total value attributed to loans from public banks, 29.8% to loans from private banks, and the remaining 27.3% to loans from housing finance companies and other non-bank lenders.

While still relatively low compared to many other nations, the total amount of housing credit maintained by India's financial system (including public and private banks, housing finance companies, and other types of lenders) expanded by 12.7% in 2023-24 and by 13.1% in 2024-25, reaching INR 40.6 trillion (USD 399.7 billion) in March 2025, which equaled 12.3% of the country's GDP at current prices.

Based on the latest figures from the RBI, housing loans maintained by commercial banks (representing over 70% of the total amount in the financial system) demonstrated a more moderate 10.7% growth in the financial year 2024-25, compared to a 36.5% increase in 2023-24. In the first five months of 2025-26, the stock increased by a further 3.3%, reaching INR 31.1 trillion (USD 352.2 billion) in August 2025. After rising notably over the past decade, the share of housing loans in the non-food gross credit extended by commercial banks remains relatively stable, reported at 16.5% in 2024-25, compared to 16.6% in 2023-24.

Note: Reporting for financial years ending in March.
Data Source: RBI.

Socio-Economic Context:

Growth Moderates But Remains Robust, Inflation Continues to Ease

Widely considered the world's fastest-growing economy, India surpassed all market estimates, exceeding growth expectations for several consecutive years with an average annual real GDP growth of nearly 8% in the post-pandemic period, according to the International Monetary Fund (IMF) data. In 2024, despite moderation, India's economic expansion has remained robust, with an annual growth level of 6.5%. Based on a better external environment, strong consumption, and public investment observed in recent months, the July 2025 update of the World Economic Outlook from the IMF made an upward revision to the earlier growth forecast for India, now projecting the economy to expand by 6.4% in 2025 and 2026.

Deloitte's August 2025 outlook points out that India's growth has not just been numerical, but structural, driven by domestic demand, a young and tech-adaptive workforce, and the government's policy prudence. "After weathering a year of global headwinds, from elevated interest rates to geopolitical tensions, India's macroeconomic fundamentals have shown remarkable resilience," said the report.

Along with resilient growth, the economy has benefited from the gradual decline in consumer price index (CPI) inflation, which fell from the annual level of 6.7% in 2022 to 5.4% in 2023 and 4.7% in 2024, most recently reported at 3.2% in August 2025, allowing for relaxation of monetary policy and bringing relief to Indian consumers. Based on recent positive developments, the RBI lowered its inflation projections for the financial year 2025-26 from 3.7% to 2.6%.

Data Source: IMF.

As indicated in the latest Article IV staff report from the IMF, India has benefited from strong growth in recent years and made progress towards meeting its Sustainable Development Goals (SDGs), such as eliminating poverty and providing decent work to the population. The 2023-24 SDG index report published by the National Institution for Transforming India (NITI Aayog) also highlights the accelerated improvement achieved on these development vectors despite global headwinds, with the nationwide composite SDG score increasing from 66 in 2020-21 to 71 in 2023-24.

At the same time, the country's labor market conditions still present a challenge for the Indian government. While the ILO estimate for total unemployment in India stood at 4.2% in 2024 (unchanged from the previous year), youth unemployment among people aged 15-24 was estimated much higher at 16.0% (up from 15.7% in 2023).

The April-June 2025 Periodic Labor Force Survey published by the Ministry of Statistics and Program Implementation assessed the urban areas' unemployment rate in the current weekly status at 4.8% for all ages and 13.1% for the population aged 15-29.

In July 2025, based on its own household survey, the Centre for Monitoring Indian Economy (CMIE), an economic think tank, estimated unemployment in the country to be higher at 6.8%, which, however, was the lowest level recorded in 34 months. 

Summarizing the state of the market, the IMF report notes that while headline indicators, such as labor force participation rate and employment, continue improving in India, the market needs quality jobs for the dynamically growing labor force. "Compared to an increase of working-age population of 14 million in 2023/24, employment rose by 27 million, including the creation of a record-high 9 million regular-wage jobs. While these are overall positive trends, the high degree of informality in the job market highlights the continued need for formal sector job creation," said the IMF.

Data Source: World Bank.

Overall, the Indian economy is set to remain among the fastest-growing globally, with the rate of expansion gradually aligning with its potential. While headwinds from geopolitical tensions, protectionist trade policies, volatility in international commodity prices, and financial market uncertainties, as well as the potential impact of weather events, continue to pose downside risks to the outlook, experts see the country as relatively insulated against the global shocks in the year ahead.

In August 2025, Fitch Ratings affirmed the country's 'BBB-' standing with a stable outlook, noting that India's economic outlook remains strong relative to peers, even as momentum has moderated over the past two years. US tariffs are considered a moderate downside risk to the outlook, but are subject to a high degree of uncertainty.

Sources:

1. Reserve Bank of India (RBI)
   1. All-India House Price Index (HPI) for Q4:2024-25, Press Release: https://rbi.org.in/
   2. Sectoral Deployment of Bank Credit - August 2025: https://rbidocs.rbi.org.in/
   3. Annual Report 2024-25: https://website.rbi.org.in/
   4. Monetary Policy Statement, 2025-26 Resolution of the Monetary Policy Committee September 29 to October 1, 2025: https://rbidocs.rbi.org.in/
   5. Policy Rate Archive: https://website.rbi.org.in/
   6. Database on Indian Economy: https://data.rbi.org.in/
2. Ministry of Statistics and Program Implementation
   1. PLFS Quarterly Bulletin April-June 2025: https://www.mospi.gov.in/
3. National Institution for Transforming India (NITI Aayog)
   1. SDG India Index 2023-24: https://www.niti.gov.in/
4. International Monetary Fund (IMF)
   1. Country Overview: India: https://www.imf.org/
   2. 2024 Article IV Staff Report: https://www.imf.org/
   3. World Economic Outlook Update, July 2025: https://www.imf.org/
5. World Bank
   1. World Development Indicators: https://databank.worldbank.org/
6. Organization for Economic Co-operation and Development (OECD)
   1. OECD data explorer: https://data-explorer.oecd.org/
7. International Labor Organization (ILO)
   1. India Employment Report 2024: https://www.ilo.org/
8. Knight Frank
   1. India Real Estate Office and Residential Market H1 2025: https://www.knightfrank.co.in/
   2. India Affordable Housing - 2025: https://www.knightfrank.co.in/research/india-affordable-housing-2025-12385.aspx
9. JLL
   1. Residential Market Dynamics, India, Q2 2025: https://www.jll.com/
10. S&P Global
    1. An Overview of India's Residential Mortgage and RMBS Market: https://www.spglobal.com/
11. Deloitte
    1. India Economic Outlook, August 2025: https://www.deloitte.com/us/en/insights/topics/economy/asia-pacific/india-economic-outlook.html
12. Fitch Ratings
    1. Fitch Affirms India at 'BBB-'; Outlook Stable: https://www.fitchratings.com/
13. CRIF High Mark
    1. How India Lends: Credit Landscape in India, FY2025: https://www.crifhighmark.com/
14. Centre for Monitoring Indian Economy (CMIE)
    1. Labour Markets Data Read Well: https://www.cmie.com/
15. Anarock
    1. Homebuyer Sentiment Survey - H1 2025: https://anarock.com/
16. Grant Thornton
    1. India Real Estate Report FY 2025-26: Trends, Insights & Forecasts: https://www.grantthornton.in/
17. Magicbricks Research
    1. Rental Index Apr-Jun 2025: https://property.magicbricks.com/
18. Clear
    1. Lowest Home Loan Interest Rates In September 2025: https://cleartax.in/
19. Housing.com Research
    1. Real Insight Residential, April-June 2025: https://media.unstack.com/
20. Reuters
    1. India Home Prices Set to Soar, Pushing Millions Into Costly Rentals: Reuters Poll: https://www.reuters.com/
    2. Poll: India Housing Outlook Steady but Cracks From Demand Slowdown Start to Widen: https://www.reuters.com/
21. The Economic Times
    1. 10 Things to Know About India's Real Estate Market in Q3 2025…: https://economictimes.indiatimes.com/
    2. Home Loan EMIs Continue to Fall: 7 Banks Cut Home Loan Interest Rates After RBI Repo Rate Cut in June: https://economictimes.indiatimes.com/
    3. No Rate Change, No EMI Shock: RBI's Move to Keep Housing Demand on Track: https://economictimes.indiatimes.com/
    4. India's Residential Rents Cool to 7-9% in H1 2025, but Infrastructure-Driven Micro-Markets See Sharp Hikes: https://economictimes.indiatimes.com/
22. Mint
    1. SBI Raises Home Loan Interest Rates: Here's What HDFC Bank, PNB, ICICI Bank, and Others Levy: https://www.livemint.com/