Home Prices Keep Rising Despite Affordability Worries, Report Flags Festive Boost

As the festive season goes in full swing, consumer aspiration for new purchases is also growing. This trickles down to real estate and homebuyer sentiments, too, who are looking forward to buying a new house/property, but the prices are a big roadblock. According to a joint report released by Housing.com and the Indian School of Business (ISB), home prices are continuing to rise across India even as concerns about affordability weigh on buyers.

The All-India Housing Price Index (HPI), which tracks trends in 13 cities, recorded a 14-point jump in June compared to last year. On a sequential basis too, the index moved up sharply, climbing eight points over the March quarter.

Praveen Sharma, CEO of Housing.com, said the sector is maturing despite near-term headwinds. "Short-term pressures from trade uncertainties notwithstanding, India's housing sector will continue to garner both attention and attraction as it gradually attains more maturity," he noted, adding that reforms like GST are expected to ease costs over time and support mid-segment demand.

ISB's Shekhar Tomar pointed out that while year-on-year prices are higher, the June quarter did show some stability. Demand was particularly strong for larger homes in metropolitan markets. "With inflation under control and a 100-basis point repo rate cut in the first half of 2025, we expect momentum in the 3BHK segment across NCR, Hyderabad and Bengaluru to continue," he said.

NCR leads the surge

Among cities, the National Capital Region stood out with a 42-point rise over the year, by far the strongest performance in the country. Noida, Greater Noida and Gurugram drove most of this activity, supported by investor interest and steady job creation.

Bengaluru followed with a 24-point annual jump, helped by steady inflows of IT professionals and balanced growth across configurations. Hyderabad, with a 20-point rise, continued its consistent trajectory, especially in localities along the Outer Ring Road.

Mumbai metropolitan region (MMR) has also seen growth in homebuyer's interest in the luxury and ultra-luxury categories even though it is considered one of the country's priciest housing markets.

Kolkata also saw healthy growth, with buyers leaning increasingly towards compact and relatively affordable housing options.

However, the report notes that buyer preferences are shifting sharply.

It notes a clear split in preferences, where metros continue to see demand for larger homes and premium offerings, Tier -2 markets are tilting towards smaller and more budget-friendly options.

The luxury segment is holding steady, greatly supported by wealth creation and an appetite from NRIs and high-net-worth buyers.

The bottom line

Across all markets, affordability continues to be a sore point. Rising construction costs and uneven income growth are making mid-income Housing harder to access in bigger cities.

The report notes that recent US tariffs on Indian exports could create some drag on demand in the near term.

However, the outlook is not that bad. With stable interest-rate growth and supportive policies by the central bank, the financing options for homebuyers is manageable, the report notes.

With the festive season underway, which is a period when homebuying sentiment typically improves, developers and analysts expect activity to pick up, even if stretched budgets remain an underlying concern.