Housing demand, price growth to moderate in FY26 amid increasing inventory levels

India's housing market is expected to witness a moderation in both demand and price growth in FY26, primarily due to increasing inventory levels and affordability challenges.

Housing Demand & Sales Outlook

• Sales Growth:After a robust 32% year-on-year growth in FY24, residential sales are projected to slow to around 17% in FY25 and further to approximately 9% in FY26. This slowdown is driven by a high base effect and elevated property prices.

• Inventory Levels:Unsold inventory is expected to rise in FY26 due to a surge in new project launches outpacing demand. New launches are projected to increase by 6–9%, reaching 620–640 million square feet across major cities.

  
  

Price Trends & Affordability

• Price Growth:Home prices are expected to grow at a moderated rate of 3–5% in FY26, a significant slowdown from the 13–15% growth witnessed in FY25. This is largely due to rising inventory and affordability pressures.

• Affordability:Higher interest rates and property costs have negatively impacted affordability, especially in the affordable housing segment. However, recent policy measures such as income tax reductions and repo rate adjustments may offer some relief to homebuyers.

  
  

Regional Market Insights

• Resilient Markets:Despite the overall market slowdown, Mumbai Metropolitan Region (MMR), National Capital Region (NCR), and Bengaluru are expected to maintain relatively strong demand and bookings.

• Luxury Segment:The luxury housing segment has expanded significantly, with its share in total sales increasing from 18% in FY22 to 32% in the first nine months of FY25. This growth is driven by rising demand from high-net-worth individuals in metro cities.

  
  

Developer Strategies & Market Dynamics

• Tier I Developers:Leading developers are expected to retain strong sales and financial stability, benefiting from brand credibility and customer trust.

• Affordable Housing:The affordable segment continues to face affordability issues, as developers shift focus toward mid-income and luxury projects. Government support programs like enhanced PMAY-Urban funding and the second tranche of the SWAMIH Fund are expected to provide some stimulus.

  
  

In summary, while the Indian housing sector will likely continue expanding, the pace of growth in FY26 is set to ease due to increasing supply and affordability concerns. Continued policy support and market adaptation will be key to maintaining momentum.