India Housing Market Tests Buyer Affordability Limits

India’s housing market entered the second quarter of 2026 with sales losing momentum while residential prices continued to rise across several major cities. The divergence is becoming increasingly important for urban households, as higher property costs could limit access to home ownership even while developers maintain relatively controlled inventory levels.

Data for the eight largest residential markets shows 91,729 homes were sold between April and June, compared with 89,161 new units launched. Sales fell 4.4% from the previous quarter and 6.1% from a year earlier. Yet the average sales-weighted price rose 1% sequentially to Rs 10,153 per sq ft. The pattern does not point to a broad housing glut. Developers are still selling slightly more homes than they are adding to the market. But the India housing market is showing signs of a more selective buyer base, with affordability emerging as a stronger influence on purchasing decisions. Bengaluru provides the clearest warning. Residential prices climbed 26% year-on-year to Rs 9,931 per sq ft, while sales dropped 9.2%. Such a combination suggests that higher prices are no longer being matched by equal growth in transaction volumes. Pune also crossed Rs 8,000 per sq ft, with prices rising 13.7% annually. In the Mumbai Metropolitan Region, 24,112 homes were sold, making it the largest market by sales volume, while average prices reached Rs 15,422 per sq ft. Ahmedabad remained comparatively affordable at Rs 5,295 per sq ft, although its sales declined sharply from a year earlier.

For buyers, the issue extends beyond headline prices. The Real Estate Act, or RERA, has strengthened requirements around project disclosures, registration and buyer protection. However, regulatory transparency does not remove the larger affordability challenge created by rising land, construction and financing costs. Urban planners note that future housing growth will need to balance market demand with access to homes near jobs, public transport and essential services. Otherwise, rising prices can push lower- and middle-income households towards longer commutes and less connected areas. Chennai recorded a 36% annual rise in sales, while Hyderabad grew 14.6%. Kolkata posted a 22% quarterly increase. By contrast, sales fell 20.8% in Pune and 20.2% in Ahmedabad. Technology-led markets also faced pressure in lower-priced segments amid employment uncertainty in the sector. Seasonal factors and wider geopolitical concerns added to buyer caution.

The third quarter could offer a clearer signal. Festive buying, infrastructure expansion and improving conditions in some cities may support transactions. However, sustained price growth could test household budgets further. The next phase of India’s housing market will therefore depend less on how many homes developers launch and more on whether ordinary households can continue to afford them. A healthier urban market will require supply that is not only profitable to build, but also financially and spatially accessible to the people who need it.

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India Housing Market Tests Buyer Affordability Limits