Price stability, disciplined supply shift momentum toward mid-income housing buyers
NEW DELHI, Dec 30 (The CONNECT) — After years of post-pandemic exuberance led by premium and luxury housing, India’s residential real estate market is heading into 2026 with a quieter but more consequential shift. The era of runaway luxury-led growth appears to be peaking, while the long-neglected mid-segment is positioning itself for a measured return as the sector moves from expansion to equilibrium.
That is the broad thrust of Square Yards’ latest outlook, which flags 2025 as a transition year rather than a slowdown. While headline transaction volumes softened, the underlying value of the market continued to climb—signalling not distress, but maturity.
Registered residential transactions across nine major markets fell 5% year-on-year in 2025, even as total sales value rose by over 11%. The divergence was driven by a sharp 22% jump in average deal sizes, underlining how premium and luxury homes dominated value creation even as volumes plateaued
Western India, led by the Mumbai Metropolitan Region, accounted for more than 80% of total sales value, buoyed by high-ticket purchases. Southern markets such as Bengaluru and Hyderabad, meanwhile, continued to show strong end-user participation rather than speculative churn. In the NCR, demand was sharply segmented, with affordable and mid-market housing sustaining volumes while higher-end categories showed early signs of fatigue.
Industry watchers say this bifurcation reflects a market that is no longer being pulled uniformly upward. After three to five years of steep price appreciation, several premium micro-markets are brushing against affordability ceilings. Prices in Mumbai’s MMR, for instance, have nearly doubled since 2019, while cities such as Gurugram, Pune and Bengaluru have recorded post-Covid increases ranging from 98% to 149%
This does not spell a collapse in luxury housing. Demand from high-net-worth buyers remains structurally resilient, supported by rising disposable incomes and a growing base of wealthy Indians. What 2026 is likely to bring, however, is stabilisation rather than acceleration at the top end—fewer dramatic spikes, more selective buying, and heightened sensitivity to product quality and location.
That pause at the top is creating space for the mid-segment to reassert itself.
Homes priced between ₹80 lakh and ₹1.5 crore—long squeezed between surging luxury prices and shrinking affordability—are emerging as the next incremental growth driver. With housing inflation showing signs of moderation and price growth stabilising in saturated premium markets, affordability for mid-income buyers is expected to improve in 2026
Crucially, this revival will not be volume-led in the old sense. Buyers in this segment are demanding better construction quality, stronger compliance, and infrastructure-linked locations, particularly in peripheral urban corridors. Developers, chastened by past cycles, are also showing greater discipline in supply. New residential launches rose 18% in 2025, but the pipeline remains far more calibrated than during previous booms
The outlook for 2026, therefore, is not about dramatic swings but about balance. Transaction volumes are expected to remain steady, average ticket sizes elevated, and price growth more evenly distributed across segments. End-users—not investors chasing quick gains—are set to play a larger role, especially in the mid-market.
For policymakers and planners, this phase offers a window to reinforce infrastructure-led expansion and improve urban liveability, ensuring that mid-income housing does not repeat the mistakes of the past. For developers, it is a test of execution and restraint. And for buyers, 2026 could mark the return of choice—less frenzy, more value.
After a decade defined by extremes, India’s housing market may finally be rediscovering its middle.
