India’s housing market is showing signs of strain even as luxury home sales soar, warns real estate research firm Liases Foras.
In its latest Residential Market Report for Q2 FY26, the firm says that while the country’s real estate sales value surged 15% year-on-year — led by a record rise in luxury purchases — a slowdown in construction and widening delivery gap could spell structural risks for the sector.
Luxury Drives the Boom, But Affordable Housing Falters
The report reveals that India’s housing value growth is being fuelled almost entirely by the luxury segment.
Apartments priced above ₹2 crore recorded a 24% jump in sales, while ultra-luxury homes above ₹10 crore grew 40% YoY.
However, this top-heavy growth hides a worrying reality — sales volumes across the country remained flat (0% YoY), indicating that fewer people are buying homes even as prices rise.
“The surge in high-value transactions propelled the total sales value to ₹8.27 lakh crore, masking flat unit sales volume,” said Pankaj Kapoor, Managing Director, Liases Foras.
“Meanwhile, affordable and mid-segment homes saw declines of up to 13% and 7%, showing that the market’s growth is now heavily concentrated at the top.”
Construction Slowdown: The Silent Crisis
Perhaps the most alarming finding is that the actual pace of construction has slowed sharply, widening the gap between promises and deliveries.
According to Liases Foras, the ratio of constructed supply to total marketable supply has fallen from 75% in 2017 to just 57% in 2025.
“This gap signals slower revenue recognition for builders, higher execution risks, and potential project delays,” said a spokesperson for Liases Foras.
“Builders are committing more projects than they can deliver, meaning the current boom in sales isn’t being matched by actual housing stock on the ground.”
This slowdown could lead to project bottlenecks, delayed handovers, and liquidity pressure if not addressed swiftly — especially for homebuyers awaiting possession in under-construction projects.
Mumbai Tops Sales, NCR Faces the Highest Risk
The report highlights strong regional contrasts:
- Mumbai Metropolitan Region (MMR) leads with 26% of India’s total housing sales value and 8% growth in unit sales YoY.
- National Capital Region (NCR) ranks second in value but faces the highest internal stress — with 45% of its unsold inventory classified as stalled projects.
- Tier-2 cities saw a 12% fall in sales volume, though new supply levels remained stable.
Market Has Likely Peaked
After a record FY2024–25, Liases Foras now believes the market has hit its peak. Sales volumes have already declined 3% in Q1 and 1% in Q2 of FY26, pointing to possible stagnation ahead.
“India’s housing cycle appears to be nearing saturation,” the report concludes, adding that luxury demand alone cannot sustain long-term growth without broader affordability and faster construction.
Also Read: Buying a House? Beware! These Real Estate Projects Are Up for De-registration
