Housing Sales Drop 28% In Q12025, Prices To Remain High This Year, Say Experts

However, property prices in these cities seem far from a point of easing. Hyderabad, Delhi national capital region (Delhi NCR), and the Mumbai Metropolitan Region (MMR) saw a sharp increase in pricing trends, with capital appreciation surpassing the growth in rentals.

An analysis of the key micro markets in the top-seven cities reveal that in major cities, such as Bengaluru, MMR, Delhi NCR, and Hyderabad, the average capital values increased by a greater margin than the rental values between 2021-end and 2024-end.

A Temporary Correction or a Shift in Housing Prices Trend? 

The recent decline in sales of housing properties now raises the question whether homebuyers expect a relief in property prices?  

According to a few experts Outlook Money spoke to, affordability issues persist, as just 12 per cent of the new housing in Q1 2025 are affordable (below Rs 40 lakh).  

Ankit Kansal, managing director of 360 Realtors, said the slowdown is a temporary correction rather than a sign of deeper structural issues.  

He says: “The Indian real estate market remains strong, backed by robust demand, a growing economy, and evolving buyer preferences. We expect transaction volumes to continue increasing, with premium housing prices rising by 16-20 per cent annually, while overall buyer volumes could grow by 5-10 per cent per year.” 

Kansal also highlighted the trend of “premiumisation”, with a growing focus on luxury and high-end housing. He said the demand is increasing not just in metro cities, but also in Tier-2 markets, pushing developers to create premium and high-mid-income projects in new corridors with improved infrastructure. 

Decline in New Launches

New home launches declined by 10 per cent y-o-y, from 111,000 units in Q1 2024 to over 100,000 units in Q1 2025, according to the report. Among the major regions, Delhi NCR, Bengaluru, and Kolkata saw an increase in new supply by 53 per cent, 27 per cent, and 26 per cent, respectively, while Hyderabad experienced the steepest decline at 55 per cent.

Will Housing Prices Ease? 

Despite declining sales, Vijay Kamboj, founder of Bric X Infra, does not foresee a major reduction in property prices.  

He says: “Even with a 10 per cent drop in launches and a 28 per cent fall in sales, house prices will remain firm. The sustained demand for premium and luxury properties has maintained price momentum. In fact, average property prices have increased by 17 per cent y-o-y, with Delhi NCR seeing a remarkable 34 per cent growth.” 

Kamboj also pointed to rising land and construction costs as barriers to any potential price drops. He said affordability will only improve if large-scale government-backed affordable housing initiatives are introduced. 

Luxury Housing Dominates Supply 

The report also indicated a growing focus on luxury and premium housing. Luxury and ultra-luxury homes priced above Rs 1.5 crore accounted for 42 per cent of the new supply. Meanwhile, the premium housing segment falling between the range of Rs 80 lakh and Rs 1.5 crore made up 27 per cent of the inventory. Mid-segment properties falling between in the Rs 40 lakh–80 lakh comprised 18 per cent of the new supply. Affordable housing under Rs 40 lakh accounted for just 12 per cent of the new inventory.

What’s Behind the Decline in Sales?

The decline in sales has been attributed to multiple factors, including rising home prices, higher interest rates on home loans, and economic uncertainty. Despite the slowdown, unsold inventory has decreased by 4 per cent y-o-y to approximately 560,000 units, indicating continued absorption of housing stock.

“Developers are prioritising high-margin luxury projects, creating a supply-demand gap in affordable housing. Additionally, interest rates remain high, discouraging new buyers, while geopolitical tensions and economic concerns have led to cautious investment behaviour.”

Rising Residential Prices are a major contributor in declineing the housing sales as its making homes less affordable for buyers. "Factors such as high interest rates, lack of faith in under-construction Properties, and unfavourable Loan-to-Value Ratio has also contributed to the decline in sales," says G Hari Babu, National President of President.

Additionally, average residential prices across cities have seen a considerable jump in the last two years. Amid escalating prices, many homebuyers have gone into a wait and watch mode, as per Anuj Puri, Chairman - ANAROCK Group.

Future Affordability and Market Stability 

Sanjay Daga, managing director and CEO, Anex Advisory, said the market slowdown is temporary.  

“The real estate market has been experiencing a slowdown, primarily due to rising property prices and higher interest rates, which have significantly impacted the mid- and affordable housing segments. This prompted a recent repo rate cut, and a similar move in the near future could inject much-needed positivity into the market,” he says. 

He adds: “While property price appreciation may moderate in the coming months, our overall economic fundamentals remain strong. With stability in place, I believe the industry is poised for a gradual recovery.” 

Ashwinder R Singh, Co-Chair CII Real Estate Committee, says: "Instead of across-the-board corrections, what we’ll see is developers becoming more strategic. Some will offer better payment terms. Some will throw in incentives on ready properties. Some will be open to negotiations, but only in pockets where demand has softened. But nobody is going to start slashing prices just because sales numbers are lower."

Pune: A Case Study in Resilience 

Vishal Jumani, joint managing director of Supreme Universal, cited Pune’s real estate strength, driven by its IT sector and infrastructure development. 

He says: While mid-segment housing has seen temporary saturation after rapid growth in the past 2–4 years, the luxury segment continues to thrive, with sales of Rs 1 crore-plus homes increasing significantly. Infrastructure projects like the riverfront development will further enhance connectivity and public spaces, supporting long-term growth.” 

Jumani said the market will likely stabilise by 2025, with demand in luxury housing remaining strong.  

He says, “Buyers will become more selective, prioritising value-for-money and well-connected properties. Projects made with efficient planning and purposeful design are preferred by today’s buyer. Additionally, sustainable townships and community living will shape future developments. Sales are expected to grow once the appraisal season is over and during the auspicious periods of Gudi Padwa and Akshaya Trittiya.”