Whalesbook
India's housing market is experiencing its first cooling trend in two years, according to the Knight Frank NAREDCO Sentiment Index for Q3 2025. Developers are shifting focus to premium projects, leading to a slowdown in mid-income supply. This strategic change is empowering ordinary homebuyers with increased negotiating power after a period of rapid price appreciation. Stakeholder expectations for price stability or rise have moderated, indicating a market moving towards a steadier, more balanced phase.
India's real estate market is showing early signs of cooling, marking a transition from a rapid price surge over the past two years to a more stable, balanced phase. The Knight Frank NAREDCO Sentiment Index for Q3 2025 reported an increase in current sentiment to 59 (from 56) and stable future sentiment at 61. However, a significant shift is occurring in developer strategy, with a concentration on launching premium projects and a slowdown in mid-income supply. This change directly benefits ordinary homebuyers, who are now gaining more negotiating power after an extended period of sharp price increases.
The report indicates a moderation in price expectations, with 92% of stakeholders anticipating stable or rising prices, a decrease from 96% a year ago. This suggests that the price surge of 2023-2024 is easing as buyers resist higher valuations, especially in non-premium segments.
Commercial markets remain resilient, with 95% of respondents expecting office rents to stay stable or rise and 78% anticipating steady or slightly increased new office supply. Strong leasing activity in cities like Bengaluru, Hyderabad, and Pune bolsters urban homebuyer sentiment by reinforcing confidence in employment visibility and income stability.
Funding and liquidity conditions have also remained steady, with 86% of respondents expecting them to stay stable or improve, allowing buyers to plan mortgages without sudden rate shocks. Developers are signaling caution, with future sentiment shifting downwards, indicating a focus on projects with strong presales and avoidance of speculative expansion.
Bhupindra Singh, COO of RISE Infraventures, commented, "We are seeing the market entering a healthier, more balanced cycle after an intense two-year bull run that pushed prices sharply upward. For the first time in several quarters, end-users are regaining negotiation power as launches moderate and developers streamline portfolios toward focused, premium offerings." He added that buyers are making "rational, need-based decisions" rather than emotionally driven ones.
This period is favourable for homebuyers due to stable rates, easing inflation, moderated mid-income launches, and softer price expectations. It represents a measured phase where buyers can evaluate options and negotiate with greater confidence, rather than a distressed market.
Impact
This news is highly relevant to the Indian stock market, particularly affecting listed real estate developers, construction companies, and ancillary industries like building materials. A cooling yet balanced market can lead to more sustainable growth, but may also put pressure on developers reliant on rapid sales volume. Investor sentiment towards the real estate sector might become more discerning, focusing on companies with strong fundamentals and premium project portfolios. Rating: 7/10.
Difficult terms
Sentiment Index: A survey tool that measures the collective opinion or feeling of individuals or groups towards a particular market or economic condition. In this context, it reflects the confidence and expectations of real estate stakeholders.
Premium Projects: Residential or commercial developments that are priced at the higher end of the market, often featuring luxury amenities, prime locations, and high-quality construction.
Mid-income Supply: Housing units targeted at middle-income households, typically offering standard amenities at moderate price points.
Negotiating Power: The ability of a buyer or seller to influence the price or terms of a transaction.
Urban Homebuyers: Individuals residing in cities who are purchasing residential properties.
Office Rents: The price charged for the use of office spaces.
Leasing: The act of renting or leasing commercial properties, such as office spaces.
Funding Conditions: The availability and terms of financial resources, such as loans or investment capital, for individuals and businesses.
Liquidity Conditions: The ease with which assets can be converted into cash without affecting their market price.
Mortgages: Long-term loans used to finance the purchase of real estate.
Presales: The sale of properties before or during their construction phase.
Bull Run: A prolonged period during which asset prices in a financial market consistently rise.
End-users: Individuals or entities who purchase a product or service for their own consumption or use, rather than for resale or investment.
Capital Growth: An increase in the value of an asset over time.
