India’s housing market is bracing for a mild slowdown in FY2026, with sales expected to decline by up to 3% across the top seven cities, according to credit rating agency ICRA. Rising property prices, coupled with affordability pressures, are seen as the key reasons behind this moderation.
Housing Prices Continue to Climb
Between FY2023 and FY2025, housing prices surged by over 10% annually, putting pressure on buyers. In FY2025 alone, the average selling price (ASP) rose 16%, and ICRA projects another 6–8% increase in FY2026. This sustained rise in costs is likely to weigh on demand, particularly in the affordable and mid-income categories.
Also Read:-Understanding the Removal of Indexation on Property Sales- LTCG (Long Term Capital Gain Tax)
Sales Growth Slows After Strong Run
After recording robust sales growth with a 26% CAGR between FY2022 and FY2024, the sector cooled in FY2025. The total area sold declined by 8% to 643 million sq ft, impacted by fewer new launches and slowing sales velocity in the lower-priced segments. ICRA expects sales in FY2026 to fall further, reaching 620–640 million sq ft, a dip of 0–3%.
Launches Expected to Pick Up in FY2026
Despite the slowdown, ICRA foresees new housing launches rebounding by 4–7% in FY2026, reaching 630–650 million sq ft. Developers have been calibrating supply, ensuring that unsold inventory remains at comfortable levels. As a result, the years-to-sell (YTS) metric is projected to stay healthy at 1.0–1.1 times by March 2026.
Also Read:-Benefits of Using a PropTech Platform for Home Buying in 2025-26
Luxury Housing Defies the Slowdown
While affordable and mid-income housing segments saw double-digit declines in FY2025, luxury real estate bucked the trend:
- Luxury sales grew by 6% in FY2025.
- Its share of total sales climbed from 30% in FY2024 to 34% in Q1 FY2026.
Factors like limited inventory, stronger pricing power of top developers, and sustained demand from affluent buyers continue to support this segment.
Also Read:-GST on Commercial Property in Maharashtra: Rent | Sale | Constructions
Industry Consolidation Gains Momentum
The sector is undergoing a structural shift, driven by reforms such as RERA and GST, which have tightened compliance and penalized weaker players. Buyers are increasingly gravitating towards reputed developers:
- The share of listed developers in total sales value jumped from 13.1% in FY2020 to around 20% in FY2025.
- Consolidation is expected to continue, with stronger players gaining market share.
Outlook: Stable Despite Headwinds
ICRA notes that large, established developers are in a strong financial position, having deleveraged significantly over the past 2–3 years. Although debt may rise moderately in FY2026 to fund construction, steady collections and strong project execution are expected to keep leverage at manageable levels.
Overall, the outlook for India’s residential real estate sector remains stable, with luxury housing continuing to be the bright spot in an otherwise cooling market.
India’s housing market is bracing for a mild slowdown in FY2026, with sales expected to decline by up to 3% across the top seven cities, according to credit rating agency ICRA. Rising property prices, coupled with affordability pressures, are seen as the key reasons behind this moderation.
Housing Prices Continue to Climb
Between FY2023 and FY2025, housing prices surged by over 10% annually, putting pressure on buyers. In FY2025 alone, the average selling price (ASP) rose 16%, and ICRA projects another 6–8% increase in FY2026. This sustained rise in costs is likely to weigh on demand, particularly in the affordable and mid-income categories.
Also Read:-Understanding the Removal of Indexation on Property Sales- LTCG (Long Term Capital Gain Tax)
Sales Growth Slows After Strong Run
After recording robust sales growth with a 26% CAGR between FY2022 and FY2024, the sector cooled in FY2025. The total area sold declined by 8% to 643 million sq ft, impacted by fewer new launches and slowing sales velocity in the lower-priced segments. ICRA expects sales in FY2026 to fall further, reaching 620–640 million sq ft, a dip of 0–3%.
Launches Expected to Pick Up in FY2026
Despite the slowdown, ICRA foresees new housing launches rebounding by 4–7% in FY2026, reaching 630–650 million sq ft. Developers have been calibrating supply, ensuring that unsold inventory remains at comfortable levels. As a result, the years-to-sell (YTS) metric is projected to stay healthy at 1.0–1.1 times by March 2026.
Also Read:-Benefits of Using a PropTech Platform for Home Buying in 2025-26
Luxury Housing Defies the Slowdown
While affordable and mid-income housing segments saw double-digit declines in FY2025, luxury real estate bucked the trend:
- Luxury sales grew by 6% in FY2025.
- Its share of total sales climbed from 30% in FY2024 to 34% in Q1 FY2026.
Factors like limited inventory, stronger pricing power of top developers, and sustained demand from affluent buyers continue to support this segment.
Also Read:-GST on Commercial Property in Maharashtra: Rent | Sale | Constructions
Industry Consolidation Gains Momentum
The sector is undergoing a structural shift, driven by reforms such as RERA and GST, which have tightened compliance and penalized weaker players. Buyers are increasingly gravitating towards reputed developers:
- The share of listed developers in total sales value jumped from 13.1% in FY2020 to around 20% in FY2025.
- Consolidation is expected to continue, with stronger players gaining market share.
Outlook: Stable Despite Headwinds
ICRA notes that large, established developers are in a strong financial position, having deleveraged significantly over the past 2–3 years. Although debt may rise moderately in FY2026 to fund construction, steady collections and strong project execution are expected to keep leverage at manageable levels.
Overall, the outlook for India’s residential real estate sector remains stable, with luxury housing continuing to be the bright spot in an otherwise cooling market.
