India’s residential property cycle is poised to moderate in FY27 after three years of robust expansion, according to fresh sectoral estimates by India Ratings and Research. The agency expects growth in housing sales to cool as elevated prices weigh on affordability, particularly in mid-income segments across major cities.
Between FY23 and FY25, the market witnessed strong post-pandemic recovery driven by low interest rates, income stability in formal sectors and a shift in household preferences towards ownership. However, price escalation has outpaced income growth in several urban centres, narrowing the affordability cushion that powered earlier demand. India Ratings projects year-on-year sales growth of 5–7 per cent in FY27, largely supported by value appreciation rather than volume expansion. Aggregate housing prices in the top eight metros have risen at a compounded annual growth rate of around 9 per cent since the pandemic, touching double-digit annual growth levels as of late 2025. The report highlights a structural pivot in supply. Developers increasingly prioritised premium and luxury projects over the past three years, responding to stronger margins and sustained interest from high-income buyers. This supply shift has supported absorption levels, but the high base created during FY23-FY25 is expected to dampen percentage growth rates going forward.
The mid-market segment appears more vulnerable. Analysts point to slower net hiring across large information technology services firms and role consolidation driven by automation and artificial intelligence. Cities such as Bengaluru, Pune and Hyderabad markets with significant IT-linked housing demand could see softer upgrade activity if employment expansion remains cautious. Even so, developers maintain that demand fundamentals remain intact. Industry leaders argue that while certain micro-markets may face temporary slackness, the premium category continues to demonstrate resilience. Affordable housing, by contrast, is witnessing visible offtake constraints as construction costs and land values keep base pricing elevated. Across the top eight metropolitan markets, five-year growth rates vary widely. Hyderabad, Mumbai Metropolitan Region and the National Capital Region have recorded growth exceeding 20 per cent in recent periods, while Chennai, Pune and Kolkata have posted more moderate gains. Yet, income growth has not kept pace uniformly, raising concerns about long-term affordability stress. From a macro perspective, potential interest rate easing and revised income tax slabs could provide marginal relief to mid-market buyers by improving disposable income. However, sector observers caution that sustained growth will depend less on price momentum and more on balanced supply, stable employment creation and improved urban infrastructure.
For India’s rapidly urbanising economy, the trajectory of residential real estate has implications beyond developer balance sheets. Housing demand shapes construction employment, materials supply chains and municipal revenue flows. As cities expand, aligning price growth with income levels while ensuring climate-resilient, well-connected neighbourhoods will determine whether the next phase of urban development remains inclusive or becomes increasingly segmented.
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