Residential Property Prices Expected To Moderate In FY26 Amid Surge In Supply, Noticeable Decline in Supply of Affordable Units

After two consecutive years of double-digit gains, residential property prices in India are set to moderate sharply in FY26, with projected growth falling to 3-4 per cent, according to a report by India Ratings.

The anticipated slowdown comes amid softening demand and a wave of new project launches that are expected to expand housing inventory across key markets.

In the first nine months of FY25, average prices across India’s top eight cities rose 8 per cent year-on-year (y-o-y), a notable drop from the 21 per cent growth seen in FY24 and 14 per cent in FY23. The price deceleration reflects a normalisation of post-pandemic pent-up demand and rising unaffordability for buyers in certain segments, the report said.

Bengaluru recorded the steepest price hike in the first nine months of FY25, jumping 23 per cent y-o-y, followed by the Delhi National Capital Region (Delhi-NCR) at 13 per cent, and Pune at 12 per cent.

While these numbers still show robust momentum, the underlying trend indicates cooling, especially as more supply hits the market.

Mahaveer Shankarlal Jain, director at India Ratings, said, “Price growth is expected to decelerate due to a high base and affordability pressures, especially in the premium and luxury segments.”

He added that while demand is still healthy, it is showing signs of fatigue at current price levels. Inventory is rising in tandem with demand. However, unsold stock in the top eight cities inched up to 1,027 million sq ft in 9M FY25 from 1,017 million sq ft a year ago. Yet, the average selling time of inventory has decreased from at the same time.

According to the report, this trend of moderate price uptick is likely to persist into FY26, since developers will offer new launches to take advantage of the surge in demand.

Decline in Affordable Housing

One of the biggest drivers of the slowdown, the report said, was the decline in the lower end of the housing market. The sales in this category were down by 11 per cent in 9MFY25 and its share in overall market activity slumped to 18 per cent in FY24 from 27 per cent in the previous year. As prices move north, fewer buyers will be able to get into the lower end of the market leading to an increased demand to the mid and upper-mid segments of the market.

According to the report, the proportion of new residential launches priced over Rs 1.5 crore has increased from a mere 11 per cent in CY19 to 30 per cent in CY24. This transition is helping push up average prices even as the overall growth is cooling.