India’s residential real estate market entered a decisive new phase in 2025, marked by a clear shift from volume-led growth to value-driven expansion, according to a latest joint report by the Indian Chamber of Commerce (ICC) and property consultancy ANAROCK.
While housing sales across the top seven cities declined by 14% year-on-year to around 3.96 lakh units, the total transaction value rose by 6%, crossing ₹6 lakh crore—underscoring the growing dominance of higher-priced homes and premium housing segments.
Fewer Homes Sold, More Money Spent
The divergence between falling volumes and rising transaction value reflects a structural shift in India’s housing demand. After a prolonged period of muted price growth between 2015 and 2019, average residential prices surged by nearly 54% between 2019 and 2024, supported by post-pandemic recovery, infrastructure investment, and consolidation among stronger developers.
In 2025, price appreciation moderated to about 8%, a trend the report describes as healthier and more sustainable, driven largely by end-user demand rather than speculative buying.
Affordable Housing Shrinks, Luxury Expands
One of the most notable shifts highlighted in the report is the sharp decline in affordable housing’s share of overall sales. Homes priced below ₹75 lakh, which accounted for nearly 60% of total sales in 2021, now make up only about 32% of the market.
In contrast, luxury and ultra-luxury housing has expanded rapidly.
“Luxury homes priced above ₹4 crore now contribute nearly 18–20% of total sales across the top seven cities, compared to just 1–2% before the pandemic,” said Anuj Puri, Chairman, ANAROCK Group.
The ultra-luxury segment—homes priced at ₹40 crore and above—saw a sharp 66% jump in sales in 2025, with the Mumbai Metropolitan Region (MMR) accounting for more than 70% of such transactions.
Bigger Homes, Changing Preferences
Buyer preferences have also evolved significantly. The report notes a growing demand for larger homes, with 3BHK and larger units now accounting for nearly 45–50% of demand, up from about 30% in 2018.
Average unit sizes across major cities have expanded by roughly 40% since 2021, driven by post-pandemic lifestyle changes and work-from-home flexibility. The NCR market has seen the most pronounced shift, with average home sizes nearly doubling between 2022 and 2025.
Wellness-oriented layouts, lifestyle amenities, and low-density developments are increasingly influencing purchase decisions, particularly in Tier I cities, while Tier II cities are gradually gaining traction.
Supply Side Sees Institutionalisation
On the supply front, India’s residential market is becoming increasingly institutionalised. Listed and Grade-A developers now account for nearly 45% of total residential supply, up from 28% five years ago.
This consolidation reflects stronger balance sheets, improved governance, better execution capabilities, and rising buyer confidence in established brands.
Over the past five years, approximately 12,700 acres of land have been transacted across India, with nearly 60% earmarked for residential development, signalling long-term confidence in housing demand.
Macro Fundamentals Remain Supportive
The report highlights strong macroeconomic tailwinds supporting the sector’s long-term outlook. Private consumption continues to contribute nearly 60% of India’s GDP, while government capital expenditure has nearly tripled since FY19. The banking system remains stable, with net NPAs at multi-decade lows.
Importantly, India’s mortgage-to-GDP ratio stands at just ~11%, significantly lower than global peers—indicating substantial headroom for housing finance growth.
As India moves toward becoming a USD 7.3 trillion economy, the report concludes that residential real estate is no longer merely a cyclical sector but a structural pillar of economic growth, capital formation, and urban transformation.
Also Read: Will the Housing Market Create Another Peak in 2024?
