As the festive season heralds with the onset of auspicious Navratri on September 22, the big question confronting the real estate industry is whether the festive quarter (October–December) will provide the much-needed boost to residential realty for sustained demand, especially as there has been a continuous decline in overall housing sales despite significant growth in luxury housing. However, a number of favourable factors, including a strong supporting economy, cuts in interest rates, and GST relief, hold out hopes for sustained residential demand ahead.
The declining housing sales ahead of the festive season are a sure sign of worry. According to PropEquity data, sales in 9 top cities in the April–June quarter of 2025 fell below the one-lakh mark for the first time since the September–December 2021 quarter. H1 2025 saw a 13% YoY decrease in housing sales. The continuous slide in sales since the last festive season is a cause of concern. It is pertinent to point out that during the 2024 festive season, housing sales in the top 8 cities fell by 26% compared to 2023. According to ICRA, in FY25, the area sold saw a decline of 8% to 643 msf. The rating agency projects the area sold to further decline by up to 3% to 620–640 msf in FY26. This moderation in sales velocity is primarily in the affordable and mid-priced segment. Now, the buzz around super luxury homes is also waning as brakes are put on their runaway sales.
Elevated home prices have been a major deterrent for home buyers, particularly those in the affordable and mid-priced segments. JLL data shows that home prices in Q2 across the top 7 cities shot up by 5–17%, with Delhi-NCR seeing the highest increase of 17%, followed by Bengaluru at 14%. An Anarock report says that there’s been more than a 50% surge in home prices in just 2 years—from INR 6,000 per sq ft in Q2 2023 to INR 8,990 per sq ft in Q2 2025. This steep rise in prices has severely hit affordability.
That residential real estate is facing the crisis of affordability is an open fact. Today, high home prices are a major concern for more than three-fourths of home seekers. As per Anarock data, for 61% of aspiring home buyers, the sweet spot is homes costing INR 45 lakh–90 lakh and INR 90 lakh–INR 1.5 crore. However, the problem is that hardly any inventory in this price range is available in the market. Many prospective buyers also shy away from buying homes in the affordable category, as these are too small, poorly designed, and poorly located. Due to high prices and non-availability of desired inventory, demand for affordable housing under INR 45 lakh, as per Anarock, has dropped to 17% in H1 2025 from 40% five years back. That the desired inventory of affordable housing is not there is evident from the supply data. Supply declined from 18% in H1 2023 to 12% in H1 2025.
This significant drop in the supply and sale of affordable housing also gets reflected in slow home loan growth. According to the latest RBI data, in May 2025 home loans rose just 9%, compared to 38.7% a year ago. A report by credit bureau agency CRIF Highmark shows that for FY25, home loan origination by volumes declined 5.4% to 3.47 million, compared with 3.66 million in FY24. In value terms, home loan origination saw a 2.7% increase to 10.7 lakh crore in FY24, due to greater demand for high-value homes.
Notwithstanding these negative indicators, there are enough positive factors that hold out promise for the revival of housing demand and sales ahead in the festive quarter. Against a 14% decline in home sales in FY25, rating agency ICRA expects only up to a 3% decline in sales in FY26 amidst comfortably unsold inventory levels. The rise in the share of big branded listed developers, according to ICRA, is an encouraging sign. This share increased to about 20% of the total sales value in FY25, up from 13.1% in FY20. This consolidation is expected to persist over the medium term, as prominent listed players are likely to outperform the broader market due to growing buyer confidence in them. Top listed developers, as per Anarock, are set to hit INR 1.49 lakh crore of booking targets in FY2026. They are targeting 23% growth in pre-sales over FY25. What is creditable is that they have already achieved 30% of the target in Q1 FY26.
High-end homes continue to hold promise. In H1 2025, high-end homes, as per JLL, saw a 14% demand increase. Siva Krishnan, Head of Residential Services at JLL, says that despite overall residential slowdown, there has been a rise in demand as developers focused on high-end and premium housing projects in line with the current demand trend. Healthy high-end sales have seen growth in housing demand by value. According to wealth and asset management company Nuvama, demand by value clocked 43% YoY and 11% MoM growth in July 2025. The YTD CY25 absorption by value is up 8% YoY, led by NCR, Bengaluru, and Chennai.
Supported by a strong and growing economy and robust infrastructure, the residential sector is likely to be in a stabilising phase. New infra corridors, according to Magicbricks, are emerging as the most powerful driver of housing demand across cities. In NCR, Dwarka Expressway and New Gurgaon corridors recorded a 27.6% YoY price hike. With strong infra connectivity upgrades, Noida and Greater Noida saw 95.6% and 88.1% property price increases between 2020–22.
The continuous revamping of procedural and structural reforms has been boosting the confidence of investors. David Steinbach, Global Chief Investment Officer at HINES, says that India’s real estate market has demonstrated resilience and continuous demand across various property segments despite slowdown in construction activity in many global markets. Economists believe that the GST cut is likely to give a 60 bps push to GDP growth, besides ensuring a 100 bps fall in inflation. V. Ananth Nageswaran, Chief Economic Advisor, opines that reduced GST rates and accompanying process reforms may well limit Trump tariff blow to bps of GDP. The GST boost will also help lower the cost of home acquisition. IBC law is being constantly strengthened. Now, the government is working to have a more fool-proof mechanism to check the malpractice of company promoters diverting funds fraudulently before filing personal insolvency.
The Housing Ministry is continuously providing more teeth to RERA. In a recent move, it has launched a unified RERA portal meant to fast-track stalled realty projects. Through this portal, home buyers can check project approvals, progress of the project, and developer details. All these reforms and other policy initiatives will turn out to be major drivers of consumer sentiment, in turn pushing housing demand. Amidst all this, real estate remains the most preferred investment class. Anarock Consumer Sentiment Survey reveals that 63% of people rate real estate as the most preferred asset class for investment, registering a 4% increase over last year. Seventy percent of millennials and 46% of Gen X persons use their investment gains for purchasing a home.
At the end, what will be the path ahead for residential realty in the months during the festive season? A lot will depend upon how swiftly and effectively GST reduction and interest rate cuts are passed on to consumers. It is worth mentioning that the value-conscious middle and lower-income home loan borrowers have been holding back, anticipating further rate cuts besides festival-time deals and discounts. Intriguingly, despite a 50 bps cut in repo rate in June 2025, bank lending rates in July rose. As per RBI data, the weighted average lending rate (WALR) for new loans disbursed in July 2025 was 8.8%, 18 bps higher than 8.62 in June. However, the daily 3 lakh crore surplus in banking system liquidity and the injection of INR 62,000 crore in the banking system, 2 weeks before the onset of the festive season, are expected to facilitate transmission of rate cuts, in turn boosting home sales. Further, the GST rejig reform is likely to create room for rate cuts by lowering inflation.
Going ahead, the expected correction/moderation in property prices, declining inflation, reduction in repo rate, growing infra development, rising institutional funding, and ongoing demand for premium homes hold out promise in the festive season.
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