India’s Housing Market Shifts Gears: 2025 Marks the Rise of Value-Driven
Real Estate –
ICC-ANAROCK Report
· While housing sales volumes declined 14% yearly (to approx. 3.96 lakh
units) in top 7 cities in 2025, the total transaction value rose 6%, crossing
INR 6 lakh crore
· After a muted price phase b/w 2015 & 2019, avg. residential prices
surged 54% during 2019–24; in 2025, price growth moderated to ~8%, indicating
sustainability & end-user-driven market
· In a trend reversal, homes priced below INR 75 lakh, which accounted for
nearly 60% of sales in 2021, now make up just ~32%
· Homes priced above INR 4 crore contribute nearly 18–20% of total sales
across top 7 cities, compared to just 1–2% before pandemic
· Buyer preference for 3BHKs & larger units has risen to nearly
45–50%, up from about 30% in 2018
· Meanwhile, listed and Grade-A developers now account for ~45% of total
residential supply, up from 28% 5 Yrs ago
· In last 5 years, approx. 12,700 acres of land have been transacted, with
nearly 60% earmarked for residential use
· Macro fundamentals continue to support real estate sector’s long-term
outlook; India’s mortgage-to-GDP ratio stands at just ~11%, significantly lower
than global peers
·
India’s residential real estate market entered a
decisive new phase in 2025, moving away from volume-led expansion to a more
mature, value-driven growth cycle, according to latest report by the Indian
Chamber of Commerce (ICC) and ANAROCK.
While housing sales across the top 7 cities
declined by 14% year-on-year to about 3.96 lakh units, the total
transaction value rose 6%, crossing INR 6 lakh crore - a
clear signal that higher ticket sizes and premium housing are now driving the
market.
This divergence between volume and value reflects a
structural shift underway in Indian housing. After a muted price phase between
2015 and 2019, residential prices surged nearly 54% during 2019–24,
aided by post-pandemic recovery, infrastructure spending, and consolidation
among large developers. In 2025, price growth moderated to a healthier ~8%,
pointing to a more sustainable and end-user-driven market.
Anuj Puri, Chairman – ANAROCK Group, says, “One of the most striking changes is in demand composition.
Homes priced below INR 75 lakh, which accounted for nearly 60%
of sales in 2021, now make up just ~32% of the market. In
contrast, luxury and ultra-luxury housing has expanded rapidly, supported by
rising incomes, lifestyle upgrades, and improved affordability among urban
buyers.”
“Luxury homes priced above ₹4 crore now
contribute ~18–20% of total sales in the top seven cities,
compared to just 1–2% before the pandemic,” says Puri. “The
ultra-luxury segment - homes priced at INR 40 crore and above - recorded
a sharp ~66% jump in sales in 2025, with the Mumbai Metropolitan
Region (MMMR) accounting for over 70% of such transactions.”
A structural shift in demand is evident as affordable housing gives way
to luxury segments, driven by higher incomes and evolving lifestyles. Tier I
cities lead, Tier II markets gain traction, and larger, wellness-focused,
amenity-rich homes redefine residential preferences.
The outlook remains firmly positive. Lower interest rates, rising per
capita incomes, infrastructure-led urbanization, growth in Global Capability
Centres, increased FDI inflows, and under penetration of housing finance
provide strong tailwinds.
The report further highlights a clear trend toward
larger homes. The preference for 3BHK and larger units has risen to
nearly 45–50%, up from about 30% in 2018. Average unit sizes across major
cities have expanded by roughly 40% since 2021, led by NCR, where
home sizes have nearly doubled between 2022 and 2025.
On the supply side, the market has become
increasingly institutionalized. Listed and Grade-A developers now account
for ~45% of total residential supply, up from 28% five
years ago, reflecting stronger balance sheets, execution capability, and
growing buyer trust.
Macro fundamentals continue to support the sector’s
long-term outlook. Private consumption contributes nearly 60% of
India’s GDP, government capital expenditure has tripled since FY19,
and the banking system remains strong with net NPAs at multi-decade
lows. Importantly, India’s mortgage-to-GDP ratio stands at just
~11%, significantly lower than global peers, underscoring the sector’s
under-penetration.
As India progresses toward a USD 7.3
trillion economy, the report underscores that residential real estate is no
longer just a cyclical play - but a structural pillar of economic growth,
capital formation, and urban transformation.
