India’s housing market plateaus in 2025 at 348,000 units as premium homes take 50% share

India’s residential market, which peaked in 2024, appears to have plateaued in 2025, although volumes remained steady. Residential sales across India’s top eight markets stood at around 348,204 units, broadly in line with the previous year, registering a marginal decline of 1%, according to a latest report on H2 2025 performance of the real estate sector by consultancy major Knight Frank India.

The flagship report, India Real Estate: Office and Residential Market – July to December 2025 (H2 2025), noted that overall sales for the year remained broadly steady even as new launches declined 3% to 362,184 units across the top markets. The demand, however, continued to outpace sales, reflecting developers’ confidence.

Among key markets, Mumbai made up 29% of all sales with sales of 97,188 units in 2025, with 1% growth YoY. The National Capital Region (NCR) registered a decline in sales of 9% YoY, with sales of 52,373 units in 2025, while new launches also declined 16% YoY in the same period.

Notably, sales in H2 2025 stood marginally higher by 0.4% year-over-year (YoY) at close to 178,000 units. Despite volumes being largely comparable with those of the previous period, sales volumes in H2 2025 are the highest since the end of 2013.

“Market health remained stable, with the quarters-to-sell (QTS) ratio steady at 5.8 in H2 2025, signalling sustained absorption. Weighted average prices rose across all markets, led by NCR with 19% YoY growth. These trends underline the continued resilience and evolving dynamics of India’s residential real estate sector,” the Knight Frank report stated.

Explaining the reasons, Baijal says the market is transitioning from rapid expansion to a more calibrated trajectory, supported by strong household balance sheets and long-term urban fundamentals. “Importantly, manageable inventory levels and low quarters-to-sell reinforce that the residential sector remains active, disciplined and structurally balanced as it moves into 2026.”

Talking about reasons behind a steady phase in India’s residential market, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said 2025 clearly entered a phase of consolidation at elevated levels. “With around 3,48,000 homes sold during the year, demand has held steady after an exceptional multi-year run. This reflects genuine end-user depth rather than episodic spikes. At the same time, the affordable segment of units priced under Rs 5 mn has seen a gradual and consistent decline since 2018, both in the share and volume of sales, as rising land prices, construction costs and selective buyer behaviour weigh on demand.”

Mumbai, the country’s largest residential market, bucked the national trend and recorded a 1% YoY increase in sales, retaining its leadership position amid rising prices and limited land availability. A larger proportion of the sales happened in H2 2025, which recorded a 3% rise YoY.

Chennai also saw a rise of 12% YoY in the number of units sold in 2025. In contrast, NCR saw sales decline by 9% YoY, largely due to elevated base effects and selective market activity in high-value corridors. Pune also reported a 3% YoY contraction, while Bengaluru remained broadly stable, supported by steady end-user demand and a balanced supply pipeline.

In terms of price appreciation, weighted average residential prices recorded strong YoY growth across key cities, led by NCR at 19%, followed by Hyderabad (13%), Bengaluru at 12%, and Mumbai at 7%. Knight Frank calls the price appreciation “a defining feature of the residential landscape in 2025”.

Prices rose across the markets largely due to the launch of higher value properties across the markets, pushing the weighted average prices. “This upward movement was supported by sustained demand, rising construction and land costs, and an increasing concentration of launches in higher ticket-size categories,” the report adds.