India's new home sales drop 14%, second consecutive annual decline
What's the story
India's real estate market, valued at $500 billion, witnessed a second consecutive annual decline in new home sales volume in 2025. The slump is mainly due to high prices that have made homes less affordable for many. The sales volume fell by 14% this year after a 4% decline in 2024. However, despite the drop in units sold, the total value of these sales has gone up by 6%.
Market expectations
Builders pin hopes on lower mortgage rates, GDP growth
In light of the declining sales volume, real estate developers are now looking at 2026 for a possible market recovery. They are banking on lower mortgage rates, robust GDP growth, and potential tax relief in the upcoming Union Budget to revive demand for residential properties. This strategy is aimed at restoring confidence in the sector after two years of declining sales volumes.
Market trends
Luxury homes thrive amid market challenges
Despite the overall decline in sales volume, luxury homes have continued to thrive. This is mainly due to steep price appreciation in the post-pandemic housing cycle and a deliberate shift by builders toward luxury residences for better profit margins. However, affordable segments continue to be under pressure with high land prices limiting developers' ability to build inventories for these categories.
Sector performance
Commercial real estate flourishes in 2025
Unlike the housing sector, India's commercial real estate has thrived with a record institutional investment of $10.4 billion this year. This is a 17% increase from last year, according to JLL data. The office market, which is recovering post-pandemic, received the maximum share (58%) of these investments. Foreign firms looking to set up global capability centers are driving demand for traditional and managed office space in India.
Funding strategies
Realtors tap capital market for business expansion
In light of strong demand across all asset classes, many realtors have turned to the capital market to raise funds for business expansion. Knowledge Realty Trust, sponsored by Sattva Group and Blackstone, raised ₹4,800 crore through a REIT public issue. The year also saw Adani Group winning a bid to acquire debt-ridden Jaiprakash Associates Ltd (JAL) through an insolvency process.
Future outlook
CREDAI anticipates calibrated growth in 2026
Looking ahead, CREDAI President Shekhar Patel expects 2026 to be a year of calibrated growth for the Indian real estate sector. He emphasized the need for smoother transmission of repo rate cuts, further simplification of GST, faster approvals, and improved access to long-term capital. Patel also reiterated their long-pending demand to revise the definition of affordable housing by increasing the price cap from ₹45 lakh to ₹90 lakh.