NEW DELHI: India’s residential real estate market is expected to see a moderation in growth in FY27 after a strong post-pandemic upcycle, with sales likely to rise 5-7% year-on-year, largely led by value growth in premium and mid-market segments, according to a whitepaper launched by India Ratings & Research (Ind-Ra) in association with ETRealty at ETRECA 2026 held in Mumbai on February 25.
After robust expansion during FY23-FY25 and a slower but steady FY26, the sector is entering a phase of consolidation, with elevated price levels and a high base effect expected to temper growth rates. Ind-Ra estimates overall sales at around 641 million sq ft in FY26, compared with 622 million sq ft in FY25. Sales grew 8% year-on-year in the trailing 12 months ended September 2025 across the top eight real estate clusters.
Premium drives absorption; IT hiring slowdown a watchpoint
The upcycle since the pandemic has been led largely by premium and luxury housing, shifting supply preferences toward upper mid-income and high-ticket segments. Ind-Ra expects long-term sales growth to broadly track gross fixed capital formation growth of 9–10% annually in value terms, driven by the ₹1-3 crore (mid-market) and ₹3-7 crore (premium) segments.
However, the agency flags a near-term risk from slower net headcount additions across large IT services firms and increasing role consolidation due to AI and automation. This is likely to reduce upgrade demand in IT-dependent markets such as Bengaluru, Pune and Hyderabad.
While domestic demand in volume terms (sq ft) remains positive, unit growth has moderated despite softer interest rates. Demand continues to be supported by favourable demographics, rising aspirations for larger homes, growing disposable incomes among double-income households and investment demand from NRIs and high-net-worth individuals.
Regional trends mixed; MMR largest market
Mumbai Metropolitan Region (MMR) remains the largest micro-market, accounting for 26% of sales across the top eight clusters, followed by Hyderabad at 17%.
During the trailing period of H1 FY26, Bengaluru, Ahmedabad and MMR recorded the strongest sales growth of 15-17% year-on-year, followed closely by NCR. Pune, Chennai and Hyderabad saw flat to modest growth. Over FY20-FY25, Hyderabad, Pune and MMR posted a sales CAGR exceeding 17%, while Bengaluru, NCR, Chennai, Ahmedabad and Kolkata trailed the five-year average and may see relatively better growth in FY27.
Ind-Ra notes that tech-linked corridors may see elongated decision cycles in FY27 due to moderation in IT hiring, even though end-user intent remains healthy. The mid-market segment is expected to remain relatively resilient.
Price growth to moderate; schemes likely in select markets
Aggregate housing prices in the top eight metros have risen at a post-pandemic CAGR of about 9%, and were up around 12% as of September 2025. Ind-Ra expects price growth to moderate to 4-8% year-on-year in FY26 and FY27, remaining project-specific.
Tight supply, partly due to approval and environmental challenges, has allowed developers to maintain pricing discipline. However, demand moderation and elevated price levels are likely to limit further sharp increases.
NCR and Bengaluru have seen strong price growth, which is expected to moderate but remain above 10%. In contrast, Chennai, Kolkata and Hyderabad, which lagged in FY25, are seeing a recovery in FY26.
The agency cautions that NCR could see time corrections or even selective price cuts, particularly if last year’s sales were driven more by investors than end-users. In Bengaluru and Pune, softer IT hiring and selective fresher onboarding could result in more project-specific pricing and higher use of subvention or flex-pay schemes to sustain sales velocity.
Launch momentum to improve in FY27
New launches moderated in FY25 and FY26 due to a high base and approval-related delays, with supply across the top eight cities estimated to have declined about 12% year-on-year in area terms during YTDFY26.
However, Ind-Ra expects launch momentum to improve in the rest of FY26 and into FY27, following resolution of certain regulatory hurdles and business development activities undertaken in FY24 and FY25.
Chennai recorded the highest new launch growth at 59% year-on-year, followed by Kolkata (21%) and Bengaluru (14%). Supply declined in Hyderabad (down 29%), MMR (down 18%) and Pune (down 12%).
Developers continue to focus on upper mid-income, premium and luxury segments to offset rising land costs and protect margins. Unsold inventory in premium and luxury segments rose 33% and 21% year-on-year, respectively, even as the affordable segment saw an 11% decline in unsold inventory.
Inventory risks to build gradually
Unsold inventory stood at about one billion sq ft at end-September 2025, with ready stock forming less than 5% of total inventory after strong absorption during the post-pandemic upcycle. Quarters-to-sell (QTS) remained low at about seven quarters.
However, Ind-Ra expects inventory levels to gradually outpace sales in FY27, with the launch-to-sales ratio likely to hover around 95%, compared with 120% immediately after the pandemic. The long-term average is around 85%.
The agency cautions that if the industry faces two to three consecutive years of declining demand growth, high-ticket premium and luxury inventory could face pressure. Mid-income and upper mid-income segments are expected to see relatively stickier demand.
On a QTS basis, Bengaluru, Pune and NCR are relatively better placed, while MMR, Ahmedabad and Chennai have higher inventory overhang.
Overall, while premium housing demand remains resilient and structural drivers such as demographics and rising incomes remain intact, the residential sector appears to be entering a more measured phase, with growth normalising after a strong three-year cycle.
