CHENNAI: Housing sales across eight major Indian cities edged down by 1 per cent in 2025 to a little over 3.48 lakh units, reflecting a phase of demand stagnation even as residential property prices continued to rise sharply, according to a report by Knight Frank. The marginal decline in volumes marks a pause after several years of post-pandemic recovery, suggesting that affordability pressures are beginning to weigh on buyer sentiment in key urban markets.
The report indicates that average housing prices rose by up to 19 per cent during the year, driven by higher input costs, limited availability of quality land in prime locations and a sustained shift in demand towards larger and better-equipped homes. This sharp increase in prices appears to have offset the positive impact of relatively stable home loan interest rates, resulting in muted overall sales despite steady enquiries and site visits.
Market performance varied significantly across cities. While some southern markets managed to hold up or even record modest growth in transactions, northern and western regions faced greater resistance from buyers due to sharper price escalation. In markets where prices rose at a faster pace, buyers adopted a wait-and-watch approach, delaying purchase decisions in anticipation of either price stabilisation or more attractive financing conditions.
Knight Frank’s analysis suggests that the resilience seen in housing demand over the past few years is now giving way to a more selective and value-conscious phase. End-users remain active, but they are increasingly focused on affordability, project quality and delivery timelines. At the same time, investor participation has moderated, particularly in mid-income segments where capital values have already risen significantly.
The report also highlights a growing divergence between sales volumes and sales value. While the number of units sold declined marginally, the total value of homes transacted continued to increase due to higher prices, underlining the ongoing shift towards premium and upper-mid segments. Developers, in response, have largely prioritised higher-margin projects, which has further constrained supply in the affordable and lower mid-income categories.
Looking ahead, Knight Frank expects housing demand to remain stable but cautious in the near term. Any meaningful revival in volumes is likely to depend on a combination of price moderation, sustained income growth and clarity on interest rate movements. If prices continue to outpace income growth, the market could see a prolonged phase of consolidation, with sales increasingly concentrated in select micro-markets and end-user-driven segments rather than broad-based expansion.