Residential real estate has been facing low supply in the INR 1-2 crore price segment which is a sweet spot. In H1 2026, this much sought-after segment accounted for 24% of NCR sales and the new launch share was even lower at 21%. On the other hand, homes in the INR 2-5 crore segment had higher sales and new launch share of 43% and 60% respectively. This mismatch is adversely impacting the sales momentum.
To make matters worse, out of 328600 delayed/stuck NCR units, a substantial legacy stock of middle/upper-middle housing is trapped in delayed projects. As per the Anarock study of 2021, 48% of the stock was of the mid-range segment, 31% affordable, 16% premium and 5% luxury. Further, inflation and property appreciation have effectively moved part of the old mid/premium housing stock into today's INR 1-2 crore demand price band.
According to 2025 industry data, the INR 80 lakh-1.5 crore segment share in NCR launches fell from 15% in 2024 to just 7% in 2025. On the other hand, the share of the INR 1.5 crore-2.5 crore segment increased sharply to 25%, and homes costing INR 2.5 crore continue to dominate at 55%.
The premium and luxury housing segment is likely to remain relatively resilient, with demand support from HNIs, affluent domestic buyers and NRIs. However, the affordable housing segment is likely to be affected by prolonged geopolitical uncertainty. Higher crude oil prices could increase construction costs, while elevated inflation and interest rates may reduce affordability for price-sensitive buyers. Notwithstanding the August monetary policy rate pause, members of RBI's monetary policy committee are more hawkish now, flagging the possibility of a rate hike on higher inflation, in turn dampening the festive mood.
Limited pricing power could compress margins and moderate demand. Care Edge Ratings puts the estimated unit sales at 3.5 lakh in CY 2026 in the top 6 cities. As per the Credai-Liases Foras report, in 2025 6.14 lakh housing units were sold across major markets. Overall, unit volumes dipped in specific urban centres due to a shift towards higher-priced homes. The top 7-8 cities recorded sales of 3.48 lakh-3.86 lakh units, reflecting up to a 14% YoY drop in volume. In Tier-2 cities, as per PropEquity, 156181 units were sold across 15 major cities, representing a 10% decline in volume. On account of delayed project launches, even top-listed residential developers have seen moderation in pre-sales in Q1 FY 27.
Moving ahead, there are likely headwinds, as ICRA estimates India's GDP growth at a 4-quarter low of 7% in Q1. There's a marginal rise in the urban unemployment rate in July 2026, according to the Periodic Labour Force Survey monthly bulletin. Further in CY Q4, during winter months, construction bans in the NCR due to severe air pollution conditions will add to the woes of real estate.
Notwithstanding these challenges, the big branded listed developers are banking on a festive launch push to beat slow momentum. According to Anarock, 11 top-listed developers are targeting combined pre-sales of INR 1.82 trillion in FY27, up from INR 1.49 trillion in FY26, a 22.3% year-on-year rise. Analysts also point out that moderation in Q1 sales should not be interpreted as a broad-based decline in end-user demand.
But then, a lot will depend upon the market performance during the festive quarter, especially with regard to the launch pipeline in the much-in-demand price segment. In the longer run, for sustainable growth, residential realty can't have a one-leg race – banking only on the premium and luxury segment.
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