India's residential real estate sector experienced a pivotal transformation during Q3 2025, marking the industry's first post-pandemic contraction with overall sales declining 12% year-over-year to 202,756 units during January-September 2025. This apparent downturn reflects strategic market recalibration rather than fundamental weakness, as premium housing segments demonstrated exceptional resilience while the broader market adapted to evolving consumer preferences and economic conditions.
The most compelling aspect of India's 2025 residential performance was the premium housing segment's exceptional strength. Properties valued at INR 10 million and above recorded impressive 4% year-over-year growth during the first nine months, directly contradicting overall market trends and establishing premium housing as the sector's primary driver.
Premium properties' market share expanded dramatically from 52% of total sales in January-September 2024 to 62% during the same 2025 period. This ten-percentage point increase represents one of the most significant market composition shifts in recent years, indicating fundamental changes in buyer behavior and market structure. The INR 15-30 million category emerged as the primary growth driver, recording robust 10% expansion that significantly outpaced other segments.
This premium surge occurred despite various challenges, including sustained high property prices, seasonal monsoon impacts, pre-festive market lulls, and economic uncertainties. The segment's resilience demonstrates underlying demand strength from India's expanding high-net-worth population and successful premium project positioning by developers.
Geographic distribution across India's major metropolitan areas revealed concentrated market dynamics with divergent performance patterns. Bengaluru, Mumbai, and Pune maintained their dominance, collectively holding over 60% of total sales across India's seven primary cities, despite experiencing a 9% combined decline year-over-year. This concentration reflects their status as key economic centers with strong employment growth and attractive lifestyle amenities.
Contrasting the broader trend, Chennai and Pune distinguished themselves by achieving positive year-over-year growth, with each recording approximately 14% increases in both year-to-date and Q3 2025 sales. Chennai's performance was particularly noteworthy as the only major city achieving double-digit growth. These cities' success appears linked to their technology and industrial hub status, where continued corporate expansion supported sustained residential demand.
The supply side demonstrated remarkable strategic adaptation, with developers making calculated portfolio adjustments. Total new housing launches reached 225,001 units during January-September, representing only a modest 1% year-over-year decline, suggesting maintained confidence in long-term fundamentals while making tactical current market adjustments.
Launch composition revealed clear strategic shifts toward premium segments. Despite marginal overall decline, homes priced above INR 10 million experienced substantial 5% surge in new launches, demonstrating developers' recognition of demand concentration patterns. Technology-focused metropolitan areas showed particular strength, with Bengaluru, Chennai, Hyderabad, and Pune collectively comprising 61% of year-to-date launches.
Property prices maintained strong upward momentum throughout Q3 2025, with all seven major cities recording annual increases ranging from 6% to 16%. Kolkata led price appreciation with exceptional 16% year-over-year growth, followed by Chennai at 14%, while Delhi NCR and Bengaluru achieved substantial 13% increases.
Long-term trajectories reveal sustained market strength, with Delhi NCR achieving the highest five-year compound annual growth rate exceeding 10%, closely followed by Bengaluru at 9%. Price increases were supported by developers' focus on higher-margin premium developments, elevated construction costs, and sustained buyer demand providing pricing power.
Supply-demand relationships revealed movement toward greater equilibrium and sophisticated inventory management. The Months to Sell metric remained stable at 22 months by Q3 2025 end, despite declining momentum in launches and sales, indicating harmonious supply-demand adjustments.
Bengaluru provided an interesting adjustment case study, recording the highest Months to Sell decline as launch reductions outpaced declining sales momentum, demonstrating how strategic supply management improves market conditions during reduced demand periods.
India's residential market appears positioned for equilibrium transition as rising prices create affordability challenges generating short-term declines. However, this adjustment process should ultimately strengthen fundamentals and create sustainable growth patterns.
Premium segments are expected to continue driving performance, with average transaction values rising despite volume moderation. Anticipated home loan and repo rate declines should support recovery by reducing EMI burdens and expanding affordability. Established developers are positioned to gain market share through strong brand recognition and execution capabilities.
The overall trajectory suggests that while experiencing temporary adjustment pressures, India's residential market maintains strong underlying fundamentals and is well-positioned for sustained long-term growth driven by demographic trends, economic expansion, and evolving consumer preferences toward higher-quality housing solutions.