Cracks Yet To Appear in Real Estate Bull Run, But Resilience Will Be Tested In 2025
Mumbai, Pune, Chennai sales rush unabated as fatigue sets into Hyderabad; NCR and Bengaluru slip.
The Indian real estate market has enjoyed three years of an unabated bull run. In 2024, residential home sales crossed 3,00,000 for the second consecutive year across the top seven cities, as per real estate agency CBRE. Come 2025, the market is far from slowing, yet the bull run is not strong. As per Knight Frank data, sales in four of its top cities have fallen in the January-March quarter.
“A lot of them want to start talking about a downfall in real estate, but it hasn't yet been so visible. In NCR and Bengaluru, we are getting some sense of cracks appearing. These are again superficial because it's too soon to conclusively say that markets are changing even in those two cities,” said Ghulam Zia, senior executive director, research advisory, infrastructure and valuation at Knight Frank.
The sales volume dip in NCR and Bengaluru also tell the story of strong price rise in the sector. Both these markets saw double-digit price growth on an annual basis, which might have contributed to the dip in volumes. “It remains to be seen who prevails in this tug of war between homebuyers and developers in these markets over the course of the year,” the Knight Frank report said.
Even in these two markets, in luxury segments where price plays little role, sales have been robust, indicating that the demand is intact. Launches, however, tell another story, as NCR launches are slowing down. Bengaluru saw the strongest launches amongst the top eight cities. As the data indicates, the real estate growth story is divergent across markets in the fourth year of its upcycle.
Maha Markets Are Outliers; Chennai Shines
Housing-starved Mumbai, India’s biggest real estate market, however, is showing no signs of fatigue. It saw an extreme resurgence in infrastructure with new metro lines, bridges and roads, which created new real estate markets and revived others.
In the first month of FY26, Mumbai (MMR) saw registrations of 13,000 units, seeing its best April yet in 13 years. And most of these sales are at the top-end of the market, if not the mid-end.
“I would want to highlight why Mumbai has been doing so well on the luxury side. A huge amount of wealth created on stock exchanges, on equity markets; a lot of those profit bookings have flown into real estate. But the last six seven months have been different on that front. So again I'm worried from the demand side, supply side of course is going great guns right now but how long will it last is a concern,” said Zia.
The other tech cities have been performing well too. In fact, only Pune and Chennai saw double-digit growth in sales in Q1, but the Hyderabad market has been softening in both sales and launches. The Telangana capital saw sharp growth for the last seven to eight years. Last year, however, it lost out to a new capital announcement of the spliced Andhra Pradesh.
Kolkata saw a slight dip in sales and its launches tanked. Ahmedabad also saw a decent growth in launches with stable sales in Q1. “Different cities are behaving differently right now. There is no one trend fitting all cities,” explains Zia.
In all, total sales across the top eight cities went up by 2%, with launches up by 3%. While the market might have altered, a lot of demand-supply dynamics are more organic and arise from end-users as fewer investors are not keen on the markets.
“In the last 2-3 years, the price rise has been pretty high and an investor would not be very comfortable coming in at such high prices. As per estimates we have, investor demand has not crossed 10-15%; and the market is hugely driven by end user demand,” informs Zia. NRIs too might stay away from the market due to currency fluctuations.
Will Luxe Rush Hold Up?
The pandemic has changed the dynamics of sales as well as inventory in real estate. While affordable homes priced between Rs 45 lakh to Rs 1 crore, which were once the most dominant category, have halved in overall sales, mid-end homes priced between Rs 1-2 crore have the most share in housing sales. The high-end, premium and luxury homes have all been increasing their share in the total sales since the pandemic.
A few real estate experts point out that the bull run in luxury sales, too, might see signs of unwinding in the coming months. Supply, however, seems to be expanding extensively. Very high up in the market is very shallow, and can be volatile.
The unsold inventory increased 5% year-on-year as fresh development activity has increased. The real estate market however is best judged by Quarters To Sell (QTS), which has been holding steady at 5.9 quarters, which is at the same level as last year. Here, too, there is variance across price points.
QTS in the Rs 2-5 crore and Rs 5-10 crore were at 4 and 3.6 quarters respectively in Q1 2025. The ₹20-50 crore as well as over ₹50 crore are much longer at 7.3 and 18 quarters respectively, as per Knight Frank.
“Signs of cracks may not have been evident yet but it's a worrisome situation because there is a limitation to the demand. With typical herd mentality, every developer is focusing on super luxury, the upper end of it. There will be a limit to how much demand one would have there. Already, there are concerns rising in that direction,” pointed out Zia.
Most experts surmise that in 2025, the real estate market might stabilise after dizzying growth in the last three years. As of now, there are only signs and signals of a slowdown, and that too only at the top-end of the market, which is seeing extensive supply. With a pivot in interest rates, the affordable housing market, which has stayed away until now, might also join the party, for a wholesome real estate growth story.
