Residential sales hit 15-year July high, premium homes dominate: HSBC Report

India’s residential real estate market, which experienced an overall decline in FY25, is beginning to show signs of revival, with strong growth recorded over the past two months, according to HSBC Global Investment Research, citing data from Prop Equity.

While the first quarter of FY26 was muted, value growth picked up sharply in June 2025, driven by better realisations and a stronger premium mix. This momentum continued into July, which saw a 30% year-on-year (YoY) increase in both value and volume.

Importantly, July 2025 recorded the highest area sales for the month in 15 years, supported by new launches during Q1. HSBC noted that while part of this surge was aided by a low base effect following last year’s election disruptions, the latest trends may mark the early stages of a broader recovery.

Premium Apartments Dominate Demand

The report highlighted that premium, large-sized, and multi-bedroom apartments remain the backbone of market activity. 3-4 BHK units accounted for nearly 70% of total sales value in Q1 FY26, with steady growth across cities.

By contrast, sales of super-luxury 5-6 BHK apartments declined due to fewer launches – except in Hyderabad and Pune, where demand for larger formats held firm.

Overall, premium apartments formed 67% of sales value in Q1 FY26, up from 59% in FY25, and now constitute over half of the market by area.

HSBC underlined this segment as a key driver for listed real estate developers, noting that both average realisations and apartment sizes remain near all-time highs.

Inventory Remains Manageable

Market inventory trends remain supportive, despite a slight rise in the “months of sales” metric to 19.3 months, up from 18 months a year ago. HSBC pointed out that while the months-of-sales figure ticked up, absolute unsold inventory – both in units and area – fell year-on-year, as launches were limited.

Notably, inventory in the 3-4 BHK segment rose in absolute terms, but its sales velocity improved, with months of sales coming down to 19.7.

City-Wise Trends

On a regional basis, NCR and Bangalore were standout performers. NCR, led by Gurugram, hit record highs in volumes over the last three months, surpassing the boom levels of 2011–13. Bangalore and the Mumbai Metropolitan Region (MMR) also posted their highest-ever July sales by area after a subdued FY25.

Hyderabad, which had seen a sharp decline last year, is showing signs of a turnaround, albeit from a weak base. The city, along with NCR, is witnessing a marked shift in buyer preference, with over 90% of demand coming from 3BHK and larger homes.

Bangalore also leaned heavily towards the premium segment, with approximately 80% of sales in 3BHK and above. Interestingly, NCR was the only market where demand grew across all apartment sizes.

MMR, meanwhile, retained its status as the most balanced market, with 3-4 BHK apartments comprising 48% of total absorption in Q1 FY26—a record high for the region in this category.

Conclusion

According to HSBC, the recent surge in absorption, combined with resilient pricing and favourable inventory dynamics, suggests that the Indian residential market could be entering a new growth phase after last year’s slowdown.

The premium and mid-to-large apartment categories are expected to remain the growth engines for developers, particularly in NCR, Bangalore, and MMR.

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