India's housing market grows in Q3 2025, premium homes dominate: Knight Frank

India's residential real estate market sustained its growth momentum in Q3 2025, with premium housing taking the lead. According to a recent report by Knight Frank India, the top eight residential markets in the country recorded a 1% year-on-year increase in sales, reaching a total of 87,603 housing units sold during the quarter. This growth comes despite a 2% year-on-year decline in new launches.

The stable macroeconomic environment, with inflation easing to 2.07% in August 2025 from 3.65% a year ago, provided a favourable environment for the real estate sector to spur, the report said. Additionally, the Reserve Bank of India (RBI) raised its GDP forecast for FY 2026 to 6.8% and maintained a lower repo rate compared to the end of 2024, enhancing liquidity and boosting sentiment among buyers and developers alike, it added.

Mumbai leads

Mumbai led the sales performance with 24,706 units sold, marking a 2% year-on-year increase and accounting for 28% of overall sales. Chennai emerged as the strongest growth market, with a 12% year-on-year increase in sales, reaching 4,617 units, its highest since the pandemic. Other major markets like the National Capital Region (NCR) and Bengaluru remained steady, while Pune experienced an 8% decline in sales. The report highlights that premium housing, particularly units priced over ₹1 crore, saw a significant increase in demand, growing by 15% year-on-year.

The shift towards premium housing is evident as units priced below ₹1 crore saw their share of sales drop to 48% in Q3 2025, compared to 54% in Q3 2024. The ₹1–2 crore segment emerged as the largest by volume, accounting for 28% of total sales. Notably, the ₹10-20 crore segment recorded a 170% rise in sales, reflecting a growing appetite for luxury homes among urban buyers.

Despite the decline in new launches, Chennai and Bengaluru bucked the trend with significant increases of 44% and 28% year-on-year, respectively. However, Mumbai and NCR saw substantial declines in new launches, each recording a 19% year-on-year decrease. The overall supply of new units in the top eight markets stood at 88,655 in Q3 2025, a 2% decline from the previous year.

Price appreciation remained strong across major markets, driven by the demand for premium housing. NCR led the way with a 19% year-on-year increase in prices, followed by Bengaluru and Hyderabad with 15% and 13% increases, respectively. The report notes that the market's focus continues to be on the higher end, with momentum sliding in ticket sizes under ₹10 million.

Knight Frank Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “India’s residential market in Q3 2025 has demonstrated an impressive ability to sustain momentum and the market is now in its fifth year of an upcycle. Consequently, Y-o-Y growth rate is beginning to rationalise, and we may be entering a prolonged plateau phase. Within a volatile geopolitical environment, India’s macroeconomic conditions remain stable.”

“The rate cut of up to 100 basis points, and liquidity support through the simplification of both direct taxes and GST have collectively strengthened end-user confidence. A notable outcome of this upcycle has been the surge in demand for premium housing, which has emerged as a key driver in recent years, reflecting the evolving aspirations of urban buyers for larger and higher-quality homes,” he added.

The report also points to a healthy market with a Quarters to Sell (QTS) indicator remaining steady at 5.8 quarters, equivalent to less than 18 months of available stock. Despite a 4% year-on-year increase in unsold inventory to 506,400 units, the sales velocity over the last eight quarters indicates continued demand. However, the unsold inventory in higher ticket-size categories, such as ₹20–50 million, has been notably higher than in the lower end of the market.

Disclaimer: This article was generated using AI tools and has undergone editorial review for clarity and coherence.