Incentivized by robust demand, developers in India continue to prioritize high-end properties, with the luxury segment now driving the overall market growth; the availability of affordable housing remains a pressing concern in both for-sale and rental sectors.

This extended overview from the 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

A positive investor sentiment, coupled with the rising cost of building materials, continues to drive growth in India's residential property prices. Preliminary data released by the Reserve Bank of India (RBI) in February 2024 indicates a year-on-year increase of 3.10% (-0.81% inflation-adjusted) in the All-India House Price Index for Q3:2024-25 (ending December 2024). On a quarter-on-quarter basis, the index rose by 0.39% (-0.81% inflation-adjusted).

India's house price annual change:

According to research by PropTiger, average property values across India's major cities have risen at a significantly stronger pace, albeit at varying rates. While price growth in Hyderabad remained marginal after nearly a decade of sharp increases, all other cities included in the analysis saw double-digit annual appreciation. In the National Capital Region (NCR), average property values surged by an exceptional 49% year-on-year, driven by sustained demand for luxury homes amid a rising number of high-net-worth individuals.

"The city-wise price growth is indicative of underlying demand, future prospects, and positive buyer sentiment. However, cost pressure might deepen affordability concerns in a country where a large part of the population relies on subsidies for their house purchases," noted the Annual Round-up Report.

Average residential property price per square foot in key cities:

A Reuters survey conducted in November 2024 among 12 property market experts projects that average home prices - broadly referring to housing in major cities - will rise by 6.5% in 2025 and 7.5% in 2026, largely supported by strong demand for high-end properties. "The segment which is driving all this price increase is the luxury segment. And this will continue for some more time, but the entire narrative we all are seeing is very rosy," commented Ajay Sharma, Managing Director of Valuation Services at Colliers International. While shifts in monetary policy are expected to support momentum for mid- and low-income buyers, caution must be exercised regarding affordability concerns and the market's heavy reliance on the luxury segment's growth over the longer term.

Demand Highlights:

Residential Sales Surge Amid Shifting Preferences Toward Premiumization

Minimal income disruptions among mid- and high-income households, coupled with sustained wealth creation and robust economic growth, continue to drive demand in India's residential real estate market. Recent data from Knight Frank shows 177,371 residential units sold across eight major markets in India during the second half of 2024, reflecting a 2.85% year-on-year increase. Annual sales totaled 350,612 units, reaching a 12-year high and marking a 6.54% year-on-year growth.

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

A notable shift in homebuyer preferences toward high-end properties was evident in the sales distribution by price segment. Residential units priced above INR 10 million (USD 118,399) accounted for 46% of total sales, recording a 29% year-on-year increase and emerging as the primary driver of overall market growth in the second half of 2024. In contrast, demand in the INR 5-10 million (USD 59,200-118,399) and sub-INR 5 million (USD 59,200) categories declined as buyers increasingly prioritized higher-value properties. "A clear shift toward premiumization has become the defining feature of the sector. <…> The evolving buyer preferences are driven by aspirations for an enhanced lifestyle and confidence in India's economic trajectory," noted Shishir Baijal, Chairman and Managing Director of Knight Frank India.

Mumbai maintained its position as the largest residential market, accounting for 27% of total sales with over 96,000 transactions - its highest annual sales volume in 13 years. Hyderabad and Pune also recorded all-time high sales volumes, while Kolkata registered the strongest year-on-year growth at 16%, followed by Ahmedabad (15%) and Hyderabad (12%).

In contrast, the National Capital Region (NCR) was the only major market to experience a year-on-year decline in sales, falling by 4%. However, this decline followed an exceptionally strong performance in 2023 and reflected limited inventory in select segments. "NCR has historically been among the more speculative markets with a relatively higher quantum of investment interest. Coupled with very low inventory levels in mid- and affordable categories in the right locations, this weighed down sales in the market. However, the top end of the market, with units priced in the INR 20-200 million [USD 236,798-2,367,981] range, continues to grow at a strong pace," explained Knight Frank.

Number of housing units sold in selected markets:

Looking ahead, industry experts expect housing demand to remain robust, particularly in the luxury segment, driven by rising incomes and growing consumer confidence. "India is witnessing a surge in high-net-worth individuals, supported by a fast-growing economy and rising incomes. Additionally, non-resident Indians are increasingly viewing Indian real estate as an attractive investment opportunity," stated the 2025 Outlook report by Cushman & Wakefield.

At the same time, with borrowing rates going down, the mid-segment and affordable housing categories could see renewed activity similar to the high-end segment. "The anticipated interest rate reduction, combined with moderate price growth and sustained income increases, is expected to create a conducive environment for home purchases over the next 12-18 months. Affordability levels are set to improve to their best since 2022 across all cities, except Bengaluru and Delhi NCR," said Samantak Das, Chief Economist and Head of Research & REIS at JLL India. Even in Bengaluru and Delhi NCR, affordability is expected to be better than in 2023, supporting continued buoyancy in homebuyer sentiment and ensuring long-term market resilience despite ongoing price appreciation.

Supply Highlights:

New Launches Reach Record High as Demand Remains Robust

Development activity in India's residential market continues to accelerate, driven by sustained demand growth. According to Knight Frank, 189,535 residential units were launched across the country's eight major markets in H2 2024, reflecting a 6.85% year-on-year increase. On an annual basis, total residential launches reached 372,936 units in 2024, representing a 6.33% growth compared to 2023 and the highest annual volume in 11 years.

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

Mumbai accounted for the largest share of new residential launches at 26%, followed by NCR and Pune, each at 16%. Pune registered the highest year-on-year growth at 40%, while Hyderabad (-6%), Ahmedabad (-2%), and NCR (-3%) recorded declines in new supply.

Number of housing units launched in selected markets:

Since early 2022, the supply of new residential units has consistently exceeded sales, leading to a gradual accumulation of unsold inventory, which increased by 5% year-on-year in H1 2024, according to Knight Frank. While rising inventory levels may raise concerns, sales velocity remains a critical factor in assessing market health. The Quarters to Sell (QTS) metric, which measures the time required to clear existing inventory based on sales over the previous eight quarters, continues to indicate market improvement. Despite higher inventory levels, QTS across the eight major markets has steadily declined from 9.5 quarters in H1 2021 to 5.8 quarters (less than 18 months) in H2 2024, reflecting strengthening market fundamentals.

Residential market health in major markets, by city:

India's residential sector has witnessed record levels of new launches in recent years, a trend that is expected to continue in 2025. According to real estate consultancy Anarock, the top 11 listed India-based developers plan to introduce 253.16 million square feet of new supply across multiple cities in the coming years, representing a substantial expansion of the country's housing development pipeline. "Various factors indicate that 2025 will see significant new supply added across cities, particularly by these listed developers. Amid high demand for their branded offerings, they have been aggressively tapping the capital markets," said Prashant Thakur, regional director and head of research at ANAROCK Group.

Developers continue to prioritize the luxury segment - the fastest-growing category - amid shifting buyer preferences, exacerbating the ongoing shortage of affordable housing. This remains a critical challenge, particularly for first-time buyers in the middle- and lower-income segments. While the lack of affordable housing is a global issue, the scale of the problem in India is particularly significant, given its population of over 1.4 billion and an estimated shortfall of more than 10 million affordable housing units.

Rental Market:

Rapid Rental Inflation Affects Affordability, Gives Traction to Peripheral Areas

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.

Based on these trends, local experts polled by Reuters in December 2024 projected rents across India will continue rising, the growth expectations for the year ahead ranging from 7.5% to 10%. "The stress on housing affordability will pressure more people to opt for renting, pushing the demand up in [the middle- and low-income] segment <…> The fact that most new launches and available new stock in the country's urban centers are in the premium and high-end segment would have a deep impact as well, fueling upward growth in rents," commented Sunita Mishra, research lead at Housing.com and PropTiger.com

The October-December 2024 rental index report from the property platform Magicbricks also notes that the rental market is now in the phase of rapid value appreciation, with rents outpacing capital value growth in multiple cities across India. At the same time, the report cautions landlords and investors from excessive optimism, pointing out dips in demand observed in some cities on a quarter-on-quarter basis, which indicates potential constraints in the near term.

"Rental affordability is becoming a growing concern, and a market shift seems imminent. In many cases, homeownership is now emerging as a more cost-effective alternative to renting," said Mahicbricks CEO Sudhir Pai. "With the budget relaxation this financial year and increased spending power among the middle class, more individuals may shift towards homeownership rather than renting. Additionally, the 25-basis point reduction in the RBI's repo rate is expected to further drive this transition."

Rental market dynamic in selected submarkets:

In Q4 2024, according to the Magicbricks data, nationwide demand for rental properties demonstrated a 4.1% year-on-year increase, while the available stock of listed properties dropped by 4.9% year-on-year, the mismatch supporting the 18.4% annual growth in the rental price index. Regionally, the most pronounced growth in rents (exceeding 20% year-on-year) was observed in Delhi, Hyderabad, Navi Mumbai, and Bengaluru.

In nominal terms, the monthly average asking rents per square foot in India reached INR 41.9 (USD 0.50) for furnished units, INR 36.56 (USD 0.43) for semi-furnished units, and INR 35.23 (USD 0.42) for unfurnished units. Mumbai remained the most expensive rental market, with monthly per square foot rates more than twice the national average at INR 96.23 (USD 1.14) for furnished units, INR 93.30 (USD 1.11) for semi-furnished units, and INR 78.26 (USD 0.93) for unfurnished units.

Overall, despite short-term fluctuations, the rental sector in India continues to show resilience, Magicbrics experts believe. While rapid rental inflation may influence affordability and force landlords to adjust pricing strategies in the future, it is also driving expansion into suburban and peripheral locations within metro areas, unlocking new investment opportunities in emerging rental hubs. To maximize returns in the future, investors will likely have to focus on furnished units and explore high-demand suburban markets.

Mortgage Market:

First Policy Rate Cut and Continued Growth of Loan Stock

After several consecutive hikes throughout 2022, policy rates of the Reserve Bank of India (RBI) had been stable for a year, with the first 25 b.p. cut announced by the central bank only in early February 2025, bringing the Policy Repo Rate to 6.25% and Bank Rate to 6.50%.

In the respective statement, the central bank's Monetary Policy Committee noted a decline in inflation, which is expected to further moderate in 2025-26, gradually aligning with the target, while the economic growth is observed at levels below the previous year - this dynamic opening up space for a policy shift. At the same time, the regulator maintains an overall neutral stance, considering uncertainties in global trade policies coupled with adverse weather events that continue to pose risks to India's growth and inflation outlook.

Data Source: RBI.

As Indian banks mostly have their floating-rate retail loans linked to the Repo Rate since October 2019, in line with the RBI policy trend, interest rates on home loans offered by major banks had been generally stable in 2023 and 2024 at about 8-11%, depending on the type of loan and borrower category, the minimum offer moving only marginally.

The recent policy cut is expected to benefit potential homebuyers as individual lenders begin adjusting their rates accordingly. "It is undeniably a major boost to homebuyers, particularly for affordable housing buyers. Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce - as long as banks pass on the key benefits to buyers," commented Anuj Puri, chairman of the real estate consultancy ANAROCK Group, quoted by The Economic Times.

At the time of research in March 2025, India's largest public and private banks advertised home loan products with minimum interest rates between 8.10% and 8.75%, individual offers demonstrating a decrease of 5 to 30 b.p. compared to levels previously reported by Forbes Advisor India in November 2024.

Overall, 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, focus on affordable housing through "Housing for All" (PMAY) subsidy scheme (recently reintroduced in the 2024 budget), and other measures.

As a result, 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 and housing finance companies) has been growing rapidly, expanding from 3.2% of GDP in 2001-02 to 6.60% in 2011-12 and further to 11.29% in 2023-24, reaching INR 33.2 trillion (USD 399.7 billion), according to the reporting from the National Housing Bank (NHB), a regulatory body for regulation and licensing of housing finance companies.

Based on the latest figures from the RBI, housing loans maintained by commercial banks (representing over 80% of the total amount in the financial system) demonstrated a sharp 36.5% year-on-year increase in the financial year 2023-24 and expanded further by 8.5% in the ten months of the financial year 2024-25, reaching INR 29.5 trillion (USD 342.1 billion) in January 2025. The expansion was notable not only in the nominal value of housing credit but its share in the non-food gross credit extended by commercial banks (16.6% in 2023-24, compared to 14.6% a year prior and 11.1%, on average, in the previous 15 years).

The expansion of residential lending in India is expected to continue. Brokerage house Nomura, cited by The Economic Times, projects that the home loan industry will more than double in the next five years, with mortgages growing at a clip of 15% over the next decade. Among the factors to drive the growth are the favorable demographic dividend, rising income levels, acute housing shortage, and the government's push for affordable housing via several targeted schemes.

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

Socio-Economic Context:

Growth Moderates But Remains Robust, Formal Job Creation Still Challenging

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 the annual growth level estimated at 7%. The IMF currently projects further moderation to a 6.5% growth in 2025 and 2026.

Deloitte's January 2025 outlook points out that amid slowing GDP growth, demographic dividends and growing middle-class wealth are driving India's resilience in consumption, services, and capital markets. "Rural consumption has remained robust, supported by strong agricultural performance, while the services sector continues to be a key driver of growth. Manufacturing exports, particularly in high-value-added components (such as electronics, semiconductors, and pharmaceuticals), have displayed strength, underscoring India's growing role in global value chains," said Deloitte.

Consumer Price Index (CPI) inflation in India has been on a gradual downward trajectory, easing from 7% in 2022 to 5.4% in 2023 and 4.4% in 2024, remaining however above the RBI's comfort zone in recent months, prompting the central bank to maintain its policy rates, with the first cut since 2020 announced only in February 2025, when the provisional reporting showed inflation reach 3.6%. Assuming a normal monsoon, the central bank projects CPI inflation for 2025-26 at 4.2%, while the IMF projection currently sees the indicator at 4.1% for 2025 and 2026.

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 (SDG), 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 labor market remains a significant economic challenge for the Indian government re-elected in 2024 for its third term. In 2023, ILO estimate for total unemployment in India was at 4.2% (down from 4.8% in the previous year and 6.4% two years prior), while the youth unemployment for people aged 15-24 was estimated at 15.8% (down from 17.8% a year ago and 20.9% two years prior).

In November 2024, based on its own household survey, the Centre for Monitoring Indian Economy (CMIE), an economic think tank, estimated unemployment in the country significantly higher at 8%, which, however, was lower than 9.2% previously reported in June.

The October-December 2024 Periodic Labor Force Survey published by the Ministry of Statistics and Program Implementation assessed the urban areas' unemployment rate in current weekly status at 6.4% for all ages and 16.1% for the population aged 15-29.

Summarizing the state of the market, the IMF report notes that while the 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.

"The structural long-term growth story for India remains intact driven by favorable demographics and stable governance," said Santanu Sengupta, chief India economist at Goldman Sachs Research.

In August 2024, Fitch Ratings affirmed the country's 'BBB-' standing with a stable outlook, noting its strong medium-term growth prospects and policy continuity expected for the infrastructure drive, digitization, and ease of doing business measures after the coalition led by the Bharatiya Janata Party (BJP) won a third consecutive term in national elections.

Sources:

1. Reserve Bank of India (RBI)
   1. All-India House Price Index (HPI) for Q3:2024-25, Press Release: https://rbi.org.in/
   2. Sectoral Deployment of Bank Credit - January 2025: https://website.rbi.org.in/
   3. Policy Rate Archive: https://website.rbi.org.in/
   4. Monetary Policy Statement, 2024-25 Resolution of the Monetary Policy Committee February 5 to 7, 2025: https://website.rbi.org.in/
   5. Database on Indian Economy: https://data.rbi.org.in/
2. National Housing Bank
   1. Report on Trend and Progress of Housing in India, 2024: https://www.nhb.org.in/
   2. Annual Report 2023-24: https://www.nhb.org.in/
3. Ministry of Statistics and Program Implementation
   1. PLFS Quarterly Bulletin October-December 2024: https://www.mospi.gov.in/
4. National Institution for Transforming India (NITI Aayog)
   1. SDG India Index 2023-24: https://www.niti.gov.in/
5. International Monetary Fund (IMF)
   1. Country Overview: India: https://www.imf.org/
   2. 2024 Article IV Staff Report: https://www.imf.org/
6. World Bank
   1. World Development Indicators: https://datacatalog.worldbank.org/
7. International Labor Organization (ILO)
   1. India Employment Report 2024: https://www.ilo.org/
8. Deloitte
   1. India Economic Outlook, January 2025: https://www2.deloitte.com/
9. Fitch Ratings
   1. Fitch Affirms India at 'BBB-'; Outlook Stable: https://www.fitchratings.com/
10. S&P Global
    1. An Overview of India's Residential Mortgage and RMBS Market: https://www.spglobal.com/
11. Goldman Sachs Research
    1. India's Economy is Likely to Stand Firm in an Uncertain World: https://www.goldmansachs.com/
12. Knight Frank
    1. India Real Estate Residential and Office Market H2 2024: https://www.knightfrank.co.in/
    2. Affordable Housing in India - 2024: https://www.knightfrank.com/
13. Cushman & Wakefield
    1. India Outlook 2025: https://cw-gbl-gws-prod.azureedge.net/
14. Magicbricks Research
    1. Rental Index Oct-Dec 2024: https://property.magicbricks.com/
15. PropTiger Research
    1. Real Insight Residential, Annual Round-up 2024: https://media.unstack.com/
16. Housing.com Research
    1. Residential Rents on the Rise! A Report on the Rental Property Market in India 2024: https://cdn.spark.app/
17. Centre for Monitoring Indian Economy (CMIE)
    1. Unemployment Rate Rises to 9.2% in June 2024: https://www.cmie.com/
    2. Unemployment & Employment Rates Fall: https://www.cmie.com/
18. Forbes
    1. Home Loan Interest Rates For March 2025: https://www.forbes.com/
19. Reuters
    1. India Home Prices To Rise 6.5% In 2025, Driven By Demand From Wealthy - Reuters Poll: https://www.reuters.com/
20. The Economic Times
    1. 2025 Outlook: Buying A Home In 2025? Here's How Property Market Can Shape Up: https://economictimes.indiatimes.com/
    2. Home Loan Market To More Than Double In Next Five Years: Nomura: https://economictimes.indiatimes.com/
    3. Interest Subsidy for Middle-Class Taking Home Loan Under PMAY Scheme to Come Back: Budget 2024: https://economictimes.indiatimes.com/
    4. Home Loan Gets Cheaper for First Time in 2 Years: Should 1st Time Homebuyers Make a Move Now?: https://economictimes.indiatimes.com/
21. Business Standard
    1. Developers Plan Record 253 Mn Sq Ft Housing Supply Amid Robust Demand: https://www.business-standard.com/