The Indian housing market in 2025 is undergoing notable changes, shaped by evolving economic dynamics, government policies, and shifting buyer preferences. Here’s a detailed look at the outlook for this year.
Sales and Price Trends
Housing sales in India’s top seven cities saw a significant decline of 28% in Q1 2025 compared to the previous year, with 93,280 units sold versus 130,170 in Q1 2024. This slowdown is attributed to rising property prices and global uncertainties impacting buyer sentiment. Despite the dip in sales, average residential property prices increased by 10% to 34% across these cities, driven largely by new supplies in the luxury and ultra-luxury segments. Delhi NCR and Bengaluru posted the highest annual price jumps, exceeding 34% and 20% respectively6.
Affordability and Interest Rates
Affordability is expected to improve for most buyers in 2025, primarily due to a projected cumulative 50-basis-point cut in interest rates. This anticipated policy shift by the Reserve Bank of India is likely to make home loans more accessible and reduce EMIs, especially benefiting first-time buyers and the middle-income segment. However, affordability gains may be less pronounced in Delhi NCR and Bengaluru, where price growth remains robust. Cities like Mumbai and Pune are projected to approach optimal affordability levels, while Kolkata is expected to remain the most affordable among major metros4.
Luxury Segment and Regional Variations
The luxury housing segment continues to drive price increases, fueled by demand from affluent buyers. Most new launches and available stock in urban centers are in the premium and high-end categories, which could further sideline first-time and middle-income buyers. Meanwhile, Tier 2 and Tier 3 cities are emerging as attractive alternatives due to improved infrastructure, lower property costs, and government focus on affordable housing. These cities are likely to witness increased demand and gradual price appreciation5.
Government Initiatives and Supply Dynamics
The government has extended affordable housing schemes like the Pradhan Mantri Awas Yojana (PMAY), offering incentives for both buyers and developers. Interest subsidies and reduced GST on affordable housing projects are aimed at boosting supply and making budget homes more viable. There is also a focus on expanding urban infrastructure, such as metro and smart city projects, which is enhancing the appeal of suburban and peripheral markets5.
New housing supply in the top seven cities remained above 100,000 units in Q1 2025, though this marked a 10% year-on-year decline. Notably, NCR, Bengaluru, and Kolkata saw increases in new launches, while Hyderabad and Mumbai Metropolitan Region experienced declines. Unsold inventory dropped by 4%, suggesting a healthy absorption rate despite the sales slowdown6.
Market Sentiment and Outlook
Industry experts predict a moderate rise in property prices in 2025, with the luxury segment leading the way. However, concerns about affordability for the middle class persist. The overall consensus is cautiously optimistic, with expectations of price stabilization in the mid and affordable segments and continued buoyancy in homebuyer behavior, especially if interest rates fall as anticipated45.
The 2025 housing market is characterized by stabilization, a growing focus on premium properties, and renewed efforts to enhance affordability through policy support and infrastructure development. Prospective buyers and investors should closely monitor regional trends and policy changes to make informed decisions.
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