It is only the rich who seem to be buying homes. New money is being pumped into larger, more stylish homes. On the other hand, the middle and poor are feeling the pinch of high prices and are holding back. Sales in the affordable and mid segments are down as resistance mounts against runaway prices.
Property rating agency Liases Foras’ latest second quarter review shows though sales surged 15% for the July-September 2025 quarter to Rs 8.3 lakh crore in comparison with the previous year, in terms of units sold there was no appreciable growth. The agency, which claims to have surveyed 75 cities, said the robust sales figures was on account of two factors: a 3% average increase in prices and growth in sales of luxury homes.
Apartments priced above Rs 2 crores saw 24% increase in sales volume, with the ultra-Luxury segment, Rs 10 crore and above, leading with a mammoth 40% year-on-year growth, the report says.
Affordable homes vanish
“Conversely, the ‘affordable’ (Rs.30-50 lakhs) and ‘mid’-segments (Rs.50-75 lakhs) saw volumes decline by 13% and 7%, respectively, suggesting that the current growth cycle is highly concentrated at the top end of the market,” said Pankaj Kapoor, MD of Liases Foras, in a statement.
The Pune real estate market, a big-city bellwether, seemed to corroborate Liases Forras’ findings. Property broker Knight Frank said the city’s property registration in October, this year fell 39% to 12,693 units, while stamp duty collection was down 30% to 527 crore.
Another brokerage house, Anarock, says plateauing of home sales has been the trend for some time. For 2024-25, 4.22 lakh housing units were sold across cities showing a decline of 14% from the previous year. However, sales value climbed marginally by 6% mainly driven by “sales in the luxury and ultra-luxury categories, even as affordability pressures weigh on mass-market segments,” the Knight Frank report said.
The trend continued into the current fiscal, and according to Prashant Thakur, Anarock’s head of research, 1.93 lakh units were sold in the first half of FY2026 - less than half of the previous year. Even with greater luxury demand, sales in the first half this year were not exactly galloping -- Rs 2.98 lakh crore compared to Rs Rs 5.6 crore for the entire FY2025. Take out the luxury sales, and one can see the stress in the property market.
Slowing construction
Data presented by Liases Foras points to another serious stress factor -- a slowing construction pace across the top 8 cities, creating uncertainty in delivery schedules. Liases Foras says the percentage of constructed supply against the total marketable supply has dropped dramatically from 75% in 2017 to just 57% in 2025; that’s another way of saying while projects are being launched and money raised from consumers, the completion and delivery of these projects faces higher uncertainty.
“While builders’ commitments have soared, their delivery capacity has not kept pace, suggesting the current high sales volumes are not being matched by equivalent housing stock production,” says Kapoor of Liases Foras.
About a year ago, another market tracker PropEquity reported 1,981 residential projects totaling 5.08 lakh units have stalled across 42 cities in the country, up from 4.66 lakh units in 2018. The bulk of the problem is in the two biggest cities. By April this year, in the NCR region 1.13 lakh units had stalled, while the Mumbai region accounted for 95,000 units.
Again significantly, most of these stalled projects are in the ‘affordable’ and ‘mid-income’ segments. The government, recognizing the problem had set up a budgetary fund -- the Special Window for Affordable and Mid-Income Housing (SWAMIH) in 2019. In the FY2026 budget, there is an allocation of Rs 15,000 crore to complete the construction of 1 lakh units -- far, far short of the ballooning problem.
‘Redevelopment’ stampede
There is another quixotic connection between the high demand, and high margins for luxury projects and the run for land within city limits. Luxury projects can’t be built in far flung sites. They need to be conveniently located within the city, but then land is either scarce or not available. Land therefore in cities like Mumbai account for 80-90% of project cost. This increases both the unit cost of homes, and the financial risk builders face.
In the old, dense cities the answer has been: ‘redevelopment’. After years of winding up industrial units and mills in Mumbai and handing them over to builders, the city is still short of land. So, slums and old housing societies are now making way for tall skyscrapers. The Dharavi slum redevelopment project, awarded to the Adanis, will open up 628 acres in the heart of Mumbai. Another Rs 36,000 crore ‘redevelopment project in the Mumbai suburb of Goregaon, Motilal Nagar, now an old, sleepy government MHADA colony spread over 143 acres, will made way for a swank, high-rise residential hub.
As of May 2024, Mumbai had 31,000 such ‘redevelopment’ projects. Older cities like Kolkata, Lucknow and Old Delhi will follow the same path. But ‘redevelopment’ comes with heavy costs and complications. Old residents have to be settled, legal disputes abound, and there are innumerable hidden costs. Unfortunately, in this department of urban housing, the government continues to be a bystander. Look at it whichever way. Finding homes is becoming more difficult by the day.