Festive Realty Property Power Play on Test

The residential slowdown in India has negatively impacted festive realty, with housing sales dropping below one lakh units in Q2 2025 for the first time in 14 quarters. This decline is due to high prices and a surge in demand for larger lifestyle homes. High-rise apartment prices have seen an average surge of 87% over the past five years, with Gurgaon and Greater Noida experiencing the steepest price increases The demand for spacious luxury/super-luxury homes has been largely investor-driven, with the Luxury Housing category witnessing the highest supply of 38% and premium homes forming a significant share of 62%. However, the new supply in affordable segment has declined.

From around 40% in 2019 to around 15% in H1 2025, negatively impacting affordability in prime areas of top cities and their suburbs Despite these unfavourable factors, there are positives for festive real estate. GST rationalisation will strengthen consumer sentiment and create room for further rate cuts, potentially adding 60bps to GDP growth and a 100bps fall in inflation. The government estimates that it will add up to 2.5 trillion in earnings for people to boost their disposable income Moderation in property prices in H2 2025, supported by declining inflation, reduction in repo rates, expanding infrastructure, growing institutional funding, and high demand for premium housing, will help push housing sales in the festive quarter.

Healthy high-end sales have seen growth in (Ministry of Housing and Urban Affairs) housing demand by value, and the festive quarter is expected to see 20-30% rise in property transactions on a month-on-month basis due to strong underlying structural factors The Indian real estate market, traditionally buoyed by the festive season, is currently navigating a complex landscape marked by declining sales, escalating property prices, and shifting buyer preferences. According to a recent PropEquity report, housing sales dipped below the one lakh mark in Q2 2025, a first in 14 quarters, signaling a slowdown in the residential sector. This trend continued into Q3, with sales in the top.

Seven cities falling by 9% year-on-year, from 1,07,000 units to 97,080 units. Despite this downturn in volume, the total sales value saw a 14% increase, attributed to a surge in luxury and super-luxury home sales The primary driver behind this shift is the significant rise in property prices over the past decade. High-rise apartment prices have more than doubled, with cities like Gurgaon and Greater Noida witnessing price increases of 166% and 163%, respectively. This escalation is largely due to the surge in land prices and a growing demand for larger, more luxurious homes. Developers have responded by increasing the supply of 3 BHK, 4 BHK, and 5 BHK units by 31%.

90%, and 95%, respectively. Consequently, the luxury housing segment now accounts for 38% of the total supply, with premium homes comprising 62% Conversely, the affordable housing segment has seen a decline in both supply and sales. The share of affordable housing supply has dropped from 40% in 2019 to around 15% in H1 2025, with its contribution to overall sales falling from 38% in 2019 to 18% in H1 2025. In Q3 2025, the affordable segment’s supply was at its lowest at 16%, while the mid-segment (INR 40-80 lakh) supply was also low at 23%. This reduction in affordable housing supply has adversely impacted first-time and entry-level homebuyers, pushing many towards.

Rented accommodations and contributing to an increase in rental prices Despite these challenges, several factors offer hope for the festive real estate market. The government’s recent GST rationalization is expected to bolster consumer sentiment, potentially leading to increased demand. Economists predict that the GST rate cuts could provide a 60 basis points boost to GDP growth and result in a 100 basis points reduction in inflation. Additionally, the 100 basis points interest rate cut has created room for further rate reductions, which could make home loans more.

Affordable and stimulate demand while the Indian real estate market faces a challenging period with declining sales and escalating prices, the festive season, coupled with supportive (Ministry Housing) government measures, could provide the necessary impetus for a market rebound. However, for a sustained recovery, a balanced approach addressing both luxury and affordable housing needs is essential.