Whalesbook
India's Housing Market Faces Significant Downturn
India's once-booming housing market is showing signs of losing momentum as sales across the nation's nine largest cities declined sharply in the fourth quarter of 2025. A new report by PropEquity reveals a 16 per cent year-on-year drop in housing sales, with volumes falling to 98,019 units. This marks the lowest quarterly sales volume recorded since the third quarter of 2021, indicating a significant slowdown.
Overall housing sales saw a marginal 2 per cent dip quarter-on-quarter, but the year-on-year decline highlights a more substantial cooling trend. Homebuyer demand registered at 98,019 units for the quarter, reflecting a notable decrease in market activity compared to the previous year.
Market Performance Varied Across Major Cities
The downturn was not uniform across all urban centers. Only two major metropolitan areas managed to buck the trend and report growth in housing sales. Navi Mumbai saw a commendable 13 per cent year-on-year increase in sales, along with a strong 17 per cent rise on a quarter-on-quarter basis. Delhi-NCR also posted growth, with sales up 4 per cent year-on-year and 11 per cent quarter-on-quarter.
In stark contrast, seven other cities recorded significant declines. Pune experienced the sharpest contraction among the major markets, with housing absorption falling by a steep 31 per cent year-on-year. Mumbai recorded a 25 per cent year-on-year decline in sales, while Thane saw a substantial 26 per cent year-on-year drop despite a 14 per cent quarter-on-quarter rebound. Bengaluru's market remained nearly flat year-on-year but saw a 7 per cent decline sequentially. Chennai and Kolkata reported sharper sequential declines of 16 per cent, with year-on-year drops of 3 per cent and 11 per cent respectively.
Supply Side Shows Cautionary Trend
Reflecting the cautious market sentiment, the supply of new homes also weakened during the quarter. Overall new housing supply fell by 4 per cent quarter-on-quarter and saw a 10 per cent year-on-year decline, reaching 88,427 units. This indicates that developers are adopting a more prudent approach, likely due to slower sales, increased input costs, and a strategic shift in their launch pipelines.
Supply growth was primarily concentrated in Delhi-NCR, Navi Mumbai, and Chennai, which accounted for a significant portion of new launches. However, even within these growth markets, supply dynamics varied. Chennai, despite year-on-year growth, witnessed a substantial 55 per cent sequential decline in new supply. Bengaluru, the largest housing market, saw a significant 16 per cent drop in launches both quarter-on-quarter and year-on-year. Hyderabad and Kolkata also experienced considerable year-on-year declines in new housing supply.
Shift Towards the Premium Segment
An interesting trend emerging from the data is a noticeable shift towards the premium housing segment. While the total number of home launches decreased from approximately 4.81 lakh units in 2023 to 4.11 lakh units in 2024, the combined value of these launches increased from ₹6.3 lakh crore to ₹6.8 lakh crore. This suggests that developers are increasingly focusing on launching higher-priced, larger-value properties, potentially indicating sustained demand in the luxury and premium categories or a strategic move by developers to maximize value from fewer projects.
Impact
The slowdown in housing sales and supply could have ramifications for the broader economy. Real estate developers may face pressure on revenues and profitability, potentially impacting their stock valuations. Ancillary industries such as cement, steel, construction, and home furnishings could experience reduced demand. Furthermore, a prolonged slump in the property market might affect the financial sector through reduced mortgage demand and potential stress on developer loans. The overall consumer sentiment could also be influenced, potentially impacting economic growth. Impact Rating: 7/10
Difficult Terms Explained
- YoY: Stands for Year-on-Year, a comparison of a metric over a period with the same period in the previous year.
- QoQ: Stands for Quarter-on-Quarter, a comparison of a metric from one quarter to the preceding quarter.
- Absorption: Refers to the rate at which available housing units are sold or occupied in a specific market over a defined period.
- Premium Segment: Represents the high-end or luxury category of real estate, characterized by higher prices, exclusive amenities, and often prime locations.