Home sales cool, prices climb: Is India's housing market getting too expensive?

India's residential real estate market remained resilient in the second quarter of 2026, but a widening gap between softer home sales and firming prices is raising an important question for buyers: is housing becoming too expensive?

According to PropTiger.com's Real Insight Residential Q2 2026 report, 91,729 homes were sold across the top eight cities in Q2 2026, while developers launched 89,161 new units. Sales declined 4.4% sequentially and 6.1% year-on-year, while new launches fell 4.2% QoQ but rose 6% YoY. Despite the moderation in volumes, the sales-weighted average residential price increased 1% QoQ to Rs 10,153 per sq ft, marking the second consecutive quarter above the Rs 10,000-per-sq-ft level.

The numbers suggest that the housing market is not facing an immediate demand-supply imbalance. In fact, sales continued to exceed new supply during the quarter, limiting any meaningful build-up of unsold inventory. However, the combination of slower sales and rising prices indicates that buyers are becoming more selective as affordability comes under pressure.

Bengaluru leads the price surge

The affordability concern is particularly visible in Bengaluru, where residential prices recorded the sharpest annual increase among the eight cities tracked by PropTiger. Prices rose 26% YoY to Rs 9,931 per sq ft, even as housing sales declined 9.2% from a year earlier.

Pune also crossed the Rs 8,000-per-sq-ft mark for the first time, with prices rising 13.7% YoY to Rs 8,084 per sq ft. Meanwhile, MMR remained the country's largest residential market by both volume and value, with 24,112 units sold at an average price of Rs 15,422 per sq ft, up 20.4% YoY.

At the other end of the spectrum, Ahmedabad remained the most affordable among the top eight markets, with an average price of Rs 5,295 per sq ft. The city also recorded the sharpest sequential price increase at 7% QoQ.

Sales picture remains mixed

While overall housing sales declined, the performance across cities was far from uniform.

Chennai recorded the strongest annual growth in sales, with volumes rising 36% YoY to 7,183 units. Hyderabad followed with 13,196 units sold, up 14.6% YoY. On a sequential basis, Kolkata stood out, with sales rising 22% QoQ following a post-election recovery.

On the other hand, Pune and Ahmedabad saw sales decline 20.8% and 20.2%, respectively, from the year-ago period. Bengaluru sales fell 9.2%, while MMR and Delhi-NCR recorded 7% declines each.

The moderation was partly attributed to pre-monsoon seasonality and buyer caution linked to the US-Iran conflict. The report said technology-led markets such as Bengaluru, Pune and Hyderabad were particularly affected in the sub-Rs 1 crore segment amid AI-led workforce restructuring and technology-sector layoffs.

Premiumisation continues despite softer volumes

The latest data also points to continued premiumisation across India's major housing markets. Higher prices have not yet resulted in a major inventory build-up, suggesting that demand for premium housing remains relatively resilient.

However, the price increases are beginning to test affordability, particularly for middle-income buyers. PropTiger CEO Prakash Tejwani said the market is 'maturing, not weakening', with buyers becoming more selective even as prices remain elevated. He also highlighted affordability as the key variable to watch going forward.

The report's data reinforces that concern. Annual price appreciation ranged from 4.4% in Chennai to 26% in Bengaluru, a pace that could stretch the budgets of mid-income households.

Developers maintain supply discipline

The demand-supply equation remains relatively healthy, with 89,161 new homes launched against 91,729 sold during the quarter. This means developers have broadly maintained supply discipline despite the moderation in sales.

New launches increased 6% YoY, led by Bengaluru, where launches jumped 36.7%, and Kolkata, where they rose 37.1%. Hyderabad also recorded a 21.6% increase in new launches. MMR saw launches rise 7.9% YoY.

Chennai was an exception, with new launches plunging 43.3% YoY even as sales increased 36%. This suggests developers are responding differently across markets depending on demand conditions and inventory levels.

What could happen in the festive quarter?

The third quarter could provide an important test for whether demand can keep pace with rising prices.

PropTiger expects Q3 2026 to benefit from festive-season demand, continued recovery in Kolkata and normalisation of supply in Chennai. Bengaluru and Delhi-NCR are also expected to maintain momentum, supported by infrastructure projects including Bengaluru Metro Phase 3, Pune Line 3 extension and Chennai Phase 2.

The macro backdrop remains relatively supportive. The RBI repo rate stands at 5.25%, inflation has moderated and government capex remains supportive. GST reductions on cement, marble and granite have also provided an estimated 2-3% construction-cost buffer, although the report says these savings have largely been absorbed into project economics rather than translating into lower home prices.

Is India's housing market getting too expensive?

The Q2 numbers suggest that the answer is not yet, but affordability is becoming a bigger constraint.

Sales remain ahead of new supply, inventory has not built up meaningfully and developers continue to command pricing power in several major markets. At the same time, price growth is significantly outpacing sales growth in some cities, raising questions about how long buyers can absorb further increases.

Bengaluru is perhaps the clearest example: prices have surged 26% in a year even as sales declined. Pune has also crossed a significant Rs 8,000-per-sq-ft threshold.

The festive quarter could therefore prove crucial. If demand holds up despite elevated prices, it would reinforce the view that India's housing market is entering a structurally stronger phase. If affordability begins to weigh more heavily on volumes, however, developers may have to rethink the pace of price increases.

For now, PropTiger's assessment is that the market is maturing rather than weakening. But in a market where prices are rising even as sales cool, affordability is likely to remain the most important variable for buyers, developers and investors to watch.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)