Indian Real Estate Poised for Robust Q4 2025 Amid Festive Demand, Policy Support; Affordability and Luxury Inventory Challenges Loom

PropTiger's "RealInsight" report for Q3 2025 projects robust activity for the Indian real estate market in Q4 2025 (October-December). Key drivers include seasonal festive demand, supportive policies such as GST reductions on cement and construction materials, stable interest rates, and strong capital inflows, which are expected to enhance home loan affordability and stimulate project launches.

However, the market faces significant challenges. Affordability remains a concern in the mid and affordable housing segments due to rising property prices. The premium segment's absorption is also under scrutiny, with a large pipeline of luxury projects and growing unsold inventory potentially leading to localized price corrections if sales momentum slows.

In Q3 2025, new housing supply across the top eight Indian cities increased by 9.1% quarter-on-quarter to 91,807 units, showing year-on-year stability. While residential sales volume saw a marginal decline of 2.2% quarter-on-quarter, the aggregate value of homes sold surged by 14% year-on-year to Rs 1.52 lakh crore. This indicates a market trend of "premiumization," where growth is increasingly driven by the sale of higher-value properties. Unsold inventory grew by 4% year-on-year to 5.06 lakh units, but the Quarters-to-Sell (QTS) metric remained healthy at 5.8 quarters.

Heading: Impact The report suggests that while the Indian real estate market is set for a strong Q4 2025, companies need to manage affordability and high-end inventory. This could impact developers' profitability, especially those heavily invested in luxury projects. Stable financing and policy support are positive for home loan affordability and overall market sentiment. The trend of premiumization, where higher-value homes drive growth, indicates a shift in consumer spending towards more expensive properties. Rating: 7/10 Heading: Difficult Terms Explained Premiumization: This refers to a market trend where consumers increasingly opt for higher-priced, more luxurious, or better-quality products or services, driving overall market value even if sales volumes do not grow proportionally. In real estate, it means a growing preference for expensive homes. Inventory Overhang: This is the total number of unsold properties in the market relative to the current sales rate, indicating how long it would take to sell the existing stock. Quarters-to-Sell (QTS): A metric that estimates the number of quarters it would take to sell the current unsold inventory at the prevailing sales velocity. A QTS below 18-24 months (or 6-8 quarters) is generally considered healthy.