Balance After Boom: India’s Residential Markets Enter Consolidation Phase

By Amit Masaldan

New Delhi, September 10, 2025: India’s residential real estate sector is experiencing a strategic recalibration in 2025 which marks the end of the post-pandemic boom. The market shows a 14 per cent year-on-year moderation in sales across major urban centers as buyers reset expectations following substantial price increases in previous years. This adjustment reflects market maturation rather than distress, with sales remaining flat on a sequential quarter-on-quarter basis.

Regional variations highlight market opportunities

While national figures indicate moderation, regional performances vary significantly. Southern powerhouses Bengaluru and Chennai demonstrate remarkable resilience with 16 per cent and 33 per cent year-on-year growth respectively. Often called the Detroit of South India, Chennai witnessed a period of sustained growth as sales rose to 5,283 units in Q2 2025 from 3, 984 units in Q2 2024.

At the same time, Bengaluru too saw a considerable upswing as total sales escalated from 13,495 in Q2 2024 to 15,628 units IN Q2 2025, primarily driven by robust IT sectors and diversified economic bases. Chennai showed strength with an 11 per cent quarter-on-quarter increase in sales, suggesting accelerating momentum driven by manufacturing sector expansion and infrastructure development.

Kolkata also registered strong performance as sales units grew to 3,847 in Q2 2025 from 3,237 units in Q2 2024 with 19 per cent year-on-year growth and 1 per cent quarter-on-quarter growth, indicating sustained recovery driven by infrastructural improvements and competitive pricing.

In contrast, Mumbai Metropolitan Region (MMR) and Pune are experiencing a more significant sales depreciation of 32 per cent and 27 per cent respectively year-on-year, dwindling to 25, 939 units in Q2 2025 from 38, 266 units in Q2 2024 and 15,962 units in Q2 2025 from 21,925 units in Q2 2024, correspondingly, thereby reflecting the steep price appreciation these markets experienced during 2023-2024.

However, MMR, Pune, and Bengaluru continue to be the biggest contributors to quarterly sales, together claiming a 59 per cent share in overall numbers with 27 per cent, 16 per cent, and 16 per cent contributions respectively.

Market dynamics show mixed signals

The quarter-on-quarter data reveals varied market dynamics across cities. While Bengaluru showed robust 33 per cent quarter-on-quarter growth, MMR experienced a 16 per cent decline and Pune saw a 7 per cent decrease. Delhi NCR demonstrated resilience with 19 per cent quarter-on-quarter growth as sales fell to 10,051 units in Q2 2025 from 11,065 units in Q2 2024, while Hyderabad maintained steady performance with 8 per cent growth as sales cut to 11,513 units in Q2 2025 from 12,296 units in Q2 2024. Similarly, Ahmedabad also faced a 12 per cent quarter-on-quarter decline as unit sales reduced to 9,451 units in Q2 2025 from 9,500 units in Q2 2024, thus contrasting with its previous positive momentum.

New launches show strategic adaptation

New supply data reflects strategic market adaptation, with an overall 17 per cent year-on-year decline in new launches across eight major markets. Quarter-on-quarter data shows a 10 per cent decrease, indicating continued developer caution amid demand moderation amidst geopolitical factors that adversely affected demand in Q2, particularly the escalated border conflict between India and Pakistan and demand trickling down with steep price rise during last 2-3 years.

Regional variations in launch activity reveal diverse market responses. Kolkata witnessed an extraordinary 192 per cent year-on-year increase in new project launches (nearly tripling in the June quarter), primarily due to a low base effect and policy push that has helped the sector. Delhi NCR demonstrated significant resilience with a 29 per cent year-on-year growth in new launches, while Hyderabad showed strong performance with 69 per cent year-on-year growth. Chennai recorded impressive 64 per cent year-on-year growth in launches with an 87 per cent quarter-on-quarter increase.

Meanwhile, MMR, Pune, and Ahmedabad are experiencing recalibration in new launch numbers, with year-on-year alterations of 43 per cent, 39 per cent, and 36 per cent respectively, representing a strategic pause as these markets absorb existing inventory.

Market adaptation driven by multiple factors

The current market recalibration is primarily influenced by affordability concerns, particularly in the budget and mid-income segments across the major tier I&II cities. Significant price appreciation has shifted affordability parameters, with compound annual growth rates of 8-12 per cent in most major markets since 2022 outpacing income growth for many potential buyers. This has forced buyers to adopt a wait-and-watch mode, leading to cautious buyer sentiment.

Additionally, evolving geopolitical considerations have impacted market dynamics, with the border conflict situation creating uncertainty during Q2 2025. A more discerning buyer base dominated by end-users rather than investors has emerged, as investment alternatives yield competitive returns and rental yields average only 2-3 per cent in most residential markets.

Premium segment drives selective growth amid broader slowdown

While the overall housing market has seen a dip in demand and new launches in H1 2025, select key developers continue to demonstrate confidence by doubling down on the premium residential segment. This is reflected in strategic land acquisitions and focused launches catering to high-end buyers. Despite short-term moderation, long-term optimism persists in this niche, underpinned by stable macro fundamentals and growing aspirational demand in urban centers.

Outlook

The residential market still presents opportunities as it progresses through this recalibration phase wherein it’s not witnessing a downturn but a deliberate rebalancing. The phase of runaway growth is giving way to more measured, demand-aligned strategies by developers and buyers alike. With premium housing holding firm and regional pockets showing strength, the sector is transitioning into a more sustainable and end-user-driven phase — laying the foundation for stable, long-term growth.

The author is Chief Revenue Officer at housing.com

DISCLAIMER: The views expressed in the above piece are personal and solely those of the writer. They do not necessarily reflect Realty&More’s views.