HYDERABAD: Hyderabad’s residential real estate market is entering a more complex phase, with sales slowing even as property values remain firm and construction costs rise. Residential registrations declined in August, while home sales in Greater Hyderabad in 2026 H1 fell to their weakest level in four-and-a-half years. Yet higher ticket sizes and continued demand for premium housing suggest the slowdown has not translated into a broad-based price correction.
Developers are also facing mounting pressure on project economics. Direct construction costs are estimated to have risen 8% to 10% due to higher steel, cement, bitumen, finishing materials and other inputs. The additional burden is estimated at `150-300 per sq ft, depending on project size, height, design complexity and scale.
K Sreedhar Reddy, president of NAREDCO Telangana, said steel prices were particularly significant because steel accounts for 12% to 15% of hard construction costs. A 10% to 15% rise in steel prices can increase overall project construction expenditure by 1.5% to 3%, with the impact higher in high-rise projects because of deeper foundations, basements, shear walls and stronger structural frames, he told TNIE.
TMT steel prices in Hyderabad are currently `60,000-72,000 per metric tonne, up 10% to 15% from `52,000-63,000 in H1 2025. Cement prices have risen 8% to 12% to `320-470 per 50-kg bag from `290-420. River sand is now priced at `55-95 per cubic foot, compared with `50-88 earlier, while crushed stone aggregates have risen 4% to 7%.
Bitumen has seen a sharper increase, with prices up 12% to 18% at `42,000-52,000 per tonne. Tiles and sanitaryware have risen 10% to 20%, while some specialised finishing products have become up to 60% costlier, adding pressure particularly during the finishing stages.
The increase is being driven by higher energy and transportation costs, global freight rates, manufacturer input costs and supply constraints. Cement and steel production are energy-intensive, while higher fuel and freight costs have increased landed material costs.
Structural work accounts for a significant share of project expenditure. RCC frameworks make up about 40% to 45% of direct building costs, while steel accounts for 12% to 15% of hard construction costs. The recent increase in steel prices is estimated to add `30-50 per sq ft to construction costs. The impact is significant for large gated communities.
Margins narrow as developers absorb input costs
Sreedhar Reddy said a 1 lakh sq ft high-rise typically requires 450-550 metric tonnes of TMT steel. At current prices, even a small movement can add tens of lakhs of rupees to construction costs.
Despite the higher costs, developers have not immediately passed them on to existing buyers. Experts said they were absorbing the additional burden on ongoing projects and booked units, narrowing margins and using contingency provisions rather than changing agreed prices. The industry body expects new launches and uncommitted inventory to see a modest 1% to 3% price realignment if elevated input costs persist.
Smaller developers and contractors are under greater pressure as they have less bargaining power and rely more on local distributors and spot-market purchases. Larger developers can negotiate bulk purchases and forward contracts with manufacturers.
Demand indicators remain mixed. Residential registrations in Hyderabad fell 9% year-on-year and 4% month-on-month in August, with 5,937 homes registered. The value of registered properties stood at `4,576 crore, down 2% year-on-year but up 3% from July.
However, January-August figures remained positive, with 50,095 residential properties worth `35,423 crore registered during the first eight months of 2026.
The premium segment continues to account for a disproportionate share of market value. Homes priced above
`1 crore saw registrations fall 8% year-on-year to 1,299 units in August, but transaction value rose 2% to `2,449 crore. The segment accounted for 22% of registrations but 54% of total transaction value. Homes below `50 lakh accounted for 52% of registrations, while the `50 lakh-`1 crore segment contributed 26%.
Prices have remained firm despite weaker volumes. The weighted average transacted price rose 8% year-on-year to `4,964 per sq ft in August. Rangareddy recorded an 11% increase to `5,793 per sq ft, while Medchal-Malkajgiri and Sangareddy recorded increases of 7% and 10%, respectively.
The broader H1 picture shows buyers have become more selective. Greater Hyderabad recorded 26,068 home sales in H1 2026, down 13% from H1 2025 and the weakest half-year performance since 2022. Despite the decline, the average ticket size rose 10%, from `1.85 crore to `2.03 crore. Housing sales were valued at `52,913 crore.
Supply is another concern. Developers launched 49,656 homes in H1 2026, up 37% from 36,224 in H1 2025. Launches substantially exceeded the 26,068 homes sold during the period. Unsold inventory consequently rose 21% year-on-year to 1,42,722 units, translating into an overhang of about 29 months.
However, this does not represent an immediate supply glut. Only about 20% of the unsold stock, or nearly 30,000 units, is ready for occupation or scheduled for completion in 2026. Around 59,400 units are expected to be completed in 2027-28 and another 53,800 in 2029 or later.
Sreedhar Reddy pointed out that developers were having to balance cost pressures with the need to maintain sales momentum through careful procurement, supplier negotiations and contingency provisions. If high steel and bitumen prices persist, modest price realignments of 1% to 3% may be considered for new launches or uncommitted inventory, while booked homes are generally protected from immediate revisions, he added.
The next six to 12 months could be crucial for the construction industry. Steel prices could fluctuate within a 3% to 5% range, while cement prices could rise 4% to 6% during peak construction activity.
Smaller developers and contractors are under greater pressure as they have less bargaining power and rely more on local distributors and spot-market purchases. Larger developers can negotiate bulk purchases and forward contracts with manufacturers.
Demand indicators remain mixed. Residential registrations in Hyderabad fell 9% year-on-year and 4% month-on-month in August, with 5,937 homes registered. The value of registered properties stood at `4,576 crore, down 2% year-on-year but up 3% from July.
However, January-August figures remained positive, with 50,095 residential properties worth `35,423 crore registered during the first eight months of 2026.
The premium segment continues to account for a disproportionate share of market value. Homes priced above
`1 crore saw registrations fall 8% year-on-year to 1,299 units in August, but transaction value rose 2% to `2,449 crore. The segment accounted for 22% of registrations but 54% of total transaction value. Homes below `50 lakh accounted for 52% of registrations, while the `50 lakh-`1 crore segment contributed 26%.
Prices have remained firm despite weaker volumes. The weighted average transacted price rose 8% year-on-year to `4,964 per sq ft in August. Rangareddy recorded an 11% increase to `5,793 per sq ft, while Medchal-Malkajgiri and Sangareddy recorded increases of 7% and 10%, respectively.
The broader H1 picture shows buyers have become more selective. Greater Hyderabad recorded 26,068 home sales in H1 2026, down 13% from H1 2025 and the weakest half-year performance since 2022. Despite the decline, the average ticket size rose 10%, from `1.85 crore to `2.03 crore. Housing sales were valued at `52,913 crore.
Supply is another concern. Developers launched 49,656 homes in H1 2026, up 37% from 36,224 in H1 2025. Launches substantially exceeded the 26,068 homes sold during the period. Unsold inventory consequently rose 21% year-on-year to 1,42,722 units, translating into an overhang of about 29 months.
However, this does not represent an immediate supply glut. Only about 20% of the unsold stock, or nearly 30,000 units, is ready for occupation or scheduled for completion in 2026. Around 59,400 units are expected to be completed in 2027-28 and another 53,800 in 2029 or later.
Sreedhar Reddy pointed out that developers were having to balance cost pressures with the need to maintain sales momentum through careful procurement, supplier negotiations and contingency provisions. If high steel and bitumen prices persist, modest price realignments of 1% to 3% may be considered for new launches or uncommitted inventory, while booked homes are generally protected from immediate revisions, he added.
The next six to 12 months could be crucial for the construction industry. Steel prices could fluctuate within a 3% to 5% range, while cement prices could rise 4% to 6% during peak construction activity.