India’s residential real estate market is set to enter a stabilising phase in the current financial year 2025-26, with sales volumes expected to moderate after a period of strong growth. The area sold in the top seven property markets is projected to decline by 0-3% to 620-640 million sq ft in 2025-26, primarily due to affordability pressures and a slowdown in sales velocity, said rating agency ICRA.
The sector witnessed an 8% dip in sales to 643 million sq ft in 2024-25, following a robust CAGR of 26% during FY2022-FY2024. This decline was largely driven by reduced launches and weaker demand in the affordable and mid segments, where sales contracted by 14% and 10% respectively. In contrast, the luxury housing segment grew 6% in FY2025 and has continued to show resilience, accounting for 34% of total sales in Q1 FY2026, up from 30% in FY2024, said the ratings agency.
Launch activity, which had dropped 14% in FY2025, is expected to recover in FY2026, rising 4-7% to 630-650 million sq ft. ICRA attributes this to spillover from the previous year and comfortable unsold inventory levels.
"The calibrated launches by developers helped in maintaining a comfortable inventory level, despite moderation in sales momentum in the broader residential market. Consequently, the years-to-sell (YTS) metric is estimated to remain healthy at 1.0-1.1 times by March 2026,” said Anupama Reddy, Co-Group Head & Vice President – Corporate Ratings, ICRA.
Average selling prices (ASPs) rose 16% in FY2025 and are expected to increase a further 6-8% in FY2026, driven by the luxury segment, low inventory overhang, and stronger pricing power among top developers.
Policy reforms such as GST and RERA have accelerated industry consolidation, with the share of key listed developers rising to 20% of total sales value in FY2025 from 13.1% in FY2020.
"This shift reflects growing buyer confidence in reputed developers, particularly during the under-construction phase,” Reddy added.
ICRA expects consolidation to persist, with prominent players continuing to outperform. While debt may inch up in FY2026 to fund growth, developers’ leverage position is expected to remain comfortable. Overall, the agency has maintained a “Stable” outlook for the sector.
The sector witnessed an 8% dip in sales to 643 million sq ft in 2024-25, following a robust CAGR of 26% during FY2022-FY2024. This decline was largely driven by reduced launches and weaker demand in the affordable and mid segments, where sales contracted by 14% and 10% respectively. In contrast, the luxury housing segment grew 6% in FY2025 and has continued to show resilience, accounting for 34% of total sales in Q1 FY2026, up from 30% in FY2024, said the ratings agency.
Launch activity, which had dropped 14% in FY2025, is expected to recover in FY2026, rising 4-7% to 630-650 million sq ft. ICRA attributes this to spillover from the previous year and comfortable unsold inventory levels.
"The calibrated launches by developers helped in maintaining a comfortable inventory level, despite moderation in sales momentum in the broader residential market. Consequently, the years-to-sell (YTS) metric is estimated to remain healthy at 1.0-1.1 times by March 2026,” said Anupama Reddy, Co-Group Head & Vice President – Corporate Ratings, ICRA.
Average selling prices (ASPs) rose 16% in FY2025 and are expected to increase a further 6-8% in FY2026, driven by the luxury segment, low inventory overhang, and stronger pricing power among top developers.
Policy reforms such as GST and RERA have accelerated industry consolidation, with the share of key listed developers rising to 20% of total sales value in FY2025 from 13.1% in FY2020.
"This shift reflects growing buyer confidence in reputed developers, particularly during the under-construction phase,” Reddy added.
ICRA expects consolidation to persist, with prominent players continuing to outperform. While debt may inch up in FY2026 to fund growth, developers’ leverage position is expected to remain comfortable. Overall, the agency has maintained a “Stable” outlook for the sector.
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