Affordable housing demand declines while the mid-income segment gains share

By: icodesk io|2025/05/02 20:15:01
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Residential sales growth may drop to 9% YoY in FY26 from 17% in FY25, says India Ratings, citing high base effect and rising property pricesIndia Ratings and Research predicts residential property prices will rise 3–4% through FY26, but market intensity will decrease. They attributed the weakening market trend to increased supply levels and elevated values from the previous financial year, FY25. India’s residential property market exhibited 8% annual growth throughout its top eight cities from FY25 Q1 until September. This totalled a 21% and 14% yearly increase in FY24 and FY23, respectively. The residential property market demonstrated the highest price increases in Bengaluru, NCR, and Pune, as Bengaluru achieved 23% YoY growth during this period.https://x.com/CCO_MoC/status/1918200152000741483Residential Sales Growth May Slow in FY26According to India Ratings analysts, residential sales volume will decrease at a yearly rate of 9% during FY26, as they previously rose at an annual rate of 17% in FY25. The market slowdown indicates elevated prices and reduced affordability within different residential areas. An agency forecasted that the sales volume of residential property would reach 593 million square feet across FY25, above the 507 million square feet sales in FY24. The residential market in the top eight Indian cities, led by Mumbai Metropolitan Region (MMR) together with NCR and Bengaluru, Hyderabad, Pune, Chennai, Ahmedabad, and Kolkata, experienced a 32% annual growth in sales for the financial year 2024. MMR remained the most significant market contributor during 9MFY25, accounting for a 25% share, although Chennai demonstrated the highest growth rate at 46%. Real estate firms should maintain constant sales bookings throughout FY26, even though demand has slowed down. According to India Ratings, the combination of strong developer brands and market preferences for Tier 1 developers will make MMR, NCR, and Bengaluru cities resistant to market challenges.Inventory Levels and Segment-Wise Trends Show DivergenceAnalysis showed that the top eight cities experienced a minimal increase in their total unsold inventory, which reached 1,027 million square feet during 9MFY25 compared to 1,017 million square feet from 9MFY24. The current inventory sell-off period has been shortened to seven quarters from nine quarters because TTM sales rose from 418 million square feet to 566 million square feet. The study’s data indicates that affordable housing numbers are decreasing steadily. The affordable housing market segment demonstrated a yearly sales decrease of 11% throughout 9MFY25, which led its total portion to decline from 27% in FY23 to 18% in FY24. The combination of affordability concerns and rising prices has lowered the demand for economical housing options. The housing market stayed under the dominant control of mid- and upper-mid-income residential units. The post Affordable housing demand declines while the mid-income segment gains share appeared first on ICO Desk.

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