India’s property market is set to enter a more measured phase, with residential sales growth projected to ease to 5–7 per cent in FY27 after three years of post-pandemic expansion. Analysts say the moderation reflects a high base effect, elevated prices and shifting employment trends rather than a structural downturn.
The outlook was outlined in a sector whitepaper released by India Ratings and Research in collaboration with ETRealty at ETRECA 2026 in Mumbai. The report indicates that overall housing absorption touched an estimated 641 million sq ft in FY26, up from 622 million sq ft in FY25, with growth slowing from the double-digit gains seen earlier in the cycle. Industry experts describe the coming year as one of consolidation. Premium and upper mid-income homes priced broadly between Rs 1 crore and Rs 7 crore continue to account for a large share of transaction value. This concentration has helped maintain topline momentum even as unit volumes have moderated. However, the report flags near-term headwinds in technology-driven markets. Slower hiring and role rationalisation among major IT services firms may affect upgrade demand in cities such as Bengaluru, Pune and Hyderabad. While underlying homeownership intent remains intact, elongated decision cycles are expected in employment-sensitive corridors. Regionally, the Mumbai Metropolitan Region remains the country’s largest residential cluster, contributing roughly a quarter of total sales across the top eight cities. Hyderabad and Bengaluru continue to post healthy absorption levels, although the pace has become more uneven. Analysts note that some markets that underperformed over the past five years could see relative outperformance as supply pipelines recalibrate.
Price growth, which averaged close to 9 per cent annually since the pandemic, is also expected to soften. Forecasts suggest increases of 4–8 per cent in FY26 and FY27, with outcomes likely to vary by micro-market and project typology. In higher-priced locations such as parts of NCR and Bengaluru, developers may increasingly deploy flexible payment plans to sustain momentum rather than implement across-the-board hikes. On the supply side, new launches dipped in FY25 and FY26 due to regulatory and approval delays. Launch activity is expected to revive gradually in FY27 as business development pipelines mature. Unsold inventory stands at roughly one billion sq ft, though ready-to-move stock remains limited after strong absorption in recent years. Inventory metrics, including quarters-to-sell, remain within manageable levels. Yet analysts caution that if demand weakens for several consecutive years, high-ticket premium stock could face pressure. Mid-income housing is expected to remain comparatively resilient due to demographic demand and dual-income household growth.
The broader message is one of normalisation. Residential sales growth is moderating, but fundamentals urbanisation, income expansion and infrastructure investment continue to support steady, if less exuberant, expansion across India’s largest city markets.
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