Premium Segment Leads India’s Housing Market in Q1 2025

India’s residential real estate market began 2025 on a strong and steady note. While challenges remain in the affordable housing space, Q1 results show clear momentum—driven largely by the surge in premium housing, smart launches, and stable economic conditions. As the sector adapts to new-age buyer preferences, real estate in India is entering a new phase of growth and confidence.

Let’s look at how the residential market performed in Q1 2025 and the trends shaping what’s next.

Sales Maintain Momentum

Residential property sales in Q1 2025 stood at 88,274 units, marking a modest 2% year-on-year increase. While the growth may seem measured, it indicates steady demand across major urban centres.

Among the standout performers:

• Pune recorded a remarkable 20% year-on-year sales growth
• Chennai saw a solid 10% increase
• Mumbai led in total volume, clocking 24,930 units sold

These figures underscore how India’s residential real estate market is active despite rising prices.

Premium Housing Leads the Charge

The standout trend of Q1 2025 is the dominance of premium housing.

• Homes priced above INR 10 million comprised 46% of total sales, up from 40% last year
• The INR 20–50 million category alone surged 28% year-on-year
• Demand for spacious, upscale homes continues to rise

The rise in premium housing is being driven by factors such as hybrid work models, aspirational lifestyle upgrades, and post-pandemic preferences for more liveable, well-equipped spaces. For many, it’s no longer just about owning a home—it’s about enhancing quality of life.

Developers’ Focus on Premium Segments

Launch activity remained healthy in Q1, with 96,309 new units hitting the market—a 3% increase from the previous quarter. Notably:

• Mumbai and Bengaluru accounted for 44% of all new launches
• Bengaluru recorded the highest year-on-year growth in launches at 26%

Much of this development is geared toward premium housing, indicating developers’ confidence in this high-margin segment.

Price Movement Mirrors Demand

Residential property prices continued to rise across most Tier 1 cities in Q1:

• Bengaluru led with a 16% year-on-year increase
• Delhi NCR followed with 12% growth
• Hyderabad, Chennai, and Pune also posted moderate gains

This price appreciation aligns with the growing appetite for premium housing, particularly in micro-markets where demand is outpacing supply.

Inventory Remains in Check

Although unsold inventory rose by 5% year-on-year, the Quarters-to-Sell (QTS) ratio remains healthy at 5.9 quarters. For premium housing categories—particularly in the INR 20–50 million and INR 50–100 million brackets—QTS is even lower, at just 3.6 to 4.0 quarters. These units are being absorbed rapidly, reinforcing strong buyer interest.

Key Economic Drivers Behind Market Strength

Several macroeconomic factors are supporting the growth of residential real estate:

• The Reserve Bank of India cut interest rates by 25 basis points—the first reduction since 2020
• Inflation eased to 3.61%, boosting consumer confidence
• Liquidity improved across the banking system, easing access to home loans

These shifts made home buying more accessible and premium housing more attractive to upwardly mobile segments.

Affordability May Pinch

While the premium housing market thrives, affordable segments are feeling the pressure:

• Sales of homes under INR 5 million declined 9% year-on-year
• The INR 5–10 million range also dipped by 6%
• New supply in these brackets is shrinking as developers prioritize higher-margin projects

This divergence calls for targeted policy intervention, possibly in the form of GST reforms or incentives, to revive affordable housing momentum.

What Lies Ahead for 2025

The rest of 2025 will likely continue to be shaped by these key trends:

• Continued dominance of premium housing
• Price appreciation may moderate but remain positive
• Potential government focus on reviving affordable housing
• Growing interest in green, sustainable homes
• Steady rise of Tier 2 cities like Pune, Ahmedabad, and Hyderabad as attractive alternatives for both buyers and investors

Concluding

India’s residential real estate market in 2025 is clearly split: premium housing is surging, while affordability needs support. But overall, the sector remains resilient and future-ready, supported by stable economic indicators, a new generation of informed buyers, and long-term urbanization trends.

Looking to buy, invest, or sell in today’s fast-moving market?

Reach out to Save Max for trusted real estate expertise across India’s leading cities. Whether it’s premium property or strategic investment, we’re here to help you make the right move.

Source: CBRE