Did Indian housing market suffer in the first half of 2025? Latest real estate industry report provides key insights
Housing sales had hit a 12-year high in 2024, but things seem to be going south in 2025, with sales across the top 7-8 cities declining in the first half of the year. Rising real estate prices is said to be a key reason for buyers deferring purchases, but sentiments could change with a decline in interest rates on mortgages.
According to consulting firm Knight Frank, home sales between January and June 2025 declined 2 per cent from a year ago, 1.70 lakh units, in the country's top 8 cities. In the April-June quarter of 2025, sales were in fact down 6 per cent to 81,927 units.
The National Capital Region (NCR) and Bengaluru were the two major markets that drove overall sales lower. While sales in NCR declined 8 per cent from a year ago to 26,795 units, sales in Bengaluru were down 3 per cent to 26,599 units, according to Knight Frank India.
"Interestingly, these markets also witnessed the most price escalations during the first half of 2025, which weighed down home buyer demand in these cities," the consulting firm said.
Average home prices per square foot in NCR and Bengaluru rose 14 per cent over 12 months, Knight Frank India noted. In the same period, prices in Mumbai rose 8 per cent, in Chennai 9 per cent and in Hyderabad 11 per cent. Ahmedabad, Pune and Kolkata also saw average home prices going up 2 per cent, 6 per cent and 7 per cent respectively.
In this backdrop, in the first half of the year, Mumbai and Ahmedabad saw flat sales at 47,035 units and 9,370 units, respectively. In Pune, sales were down 1 per cent at 24,329 units, and in Kolkata, sales fell 11 per cent at 8,090 units.
Chennai and Hyderabad, though, bucked the trend, seeing sales rise 12 per cent and 3 per cent respectively.
According to another recent report by Anarock Property Consultants, which researched data for the top 7 cities, sales in the April-June quarter in fact slipped 20 per cent from a year ago at 96,285 units.
With demand turning lacklustre in many markets, developers have also dialled down new launches. According to Anarock, new launches decelerated 16 per cent from a year ago to 98,625 units in the April-June quarter. The Mumbai Metropolitan Region saw a 36 per cent year-on-year slump in supply addition.
Anuj Puri, the chairman of Anarock Group, noted that military action at home and abroad also weighed on home buyer sentiments.
"The war-like climate pushed home buyers into wait-and-watch mode, compounding the impact of soaring property prices over the past two years," said Puri.
A key trend that is visible with the price increase is that sales as well as launches of homes priced below ₹1 crore have seen a more prominent decline, with sales of units priced at over ₹1 crore now constituting almost half of the residential market. Notably, the share of sales of units priced between ₹2-5 crore has risen to 17 per cent in the first half of this year from 13 per cent in the first half of 2024.
Despite the decline in sales in the first half, the industry remains upbeat about things turning around going ahead, especially given the falling interest rates.
The Reserve Bank of India has slashed its repo rate by 100 basis points (1 per cent) so far in 2025, which in turn has begun translating into lower interest rates for home loan borrowers, especially where the loans are linked to an external benchmark like the repo.
"Strong macroeconomic fundamentals, along with a sharp reduction in interest rates, have created a supportive backdrop for real estate activity even as external headwinds remain," said Shishir Baijal, chairman and managing director of Knight Frank India.
The RBI, in June, also announced a reduction in the cash reserve ratio (CRR) by 100 basis points in four tranches, which is expected to release close to ₹2.5 lakh crore in liquidity in the banking system. This, coupled with the reduction in interest rates, has created a supportive backdrop for real estate activity, say analysts.
Puri of Anarock says that if prices remain in check, one can expect housing sales across major cities to "accelerate" in the coming quarters.
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