India RERA Rules Face New Housing Cost Pressures

India’s housing market is entering a more land-intensive phase, with home prices across the country’s seven major urban markets rising far faster than the cost of construction. The widening gap points to land values, location premiums and infrastructure-led demand becoming increasingly important in determining housing affordability.

Average construction costs rose from around ₹2,681 per sq ft in 2021 to ₹3,604 per sq ft in 2025, a 34% increase. Over the same period, average home selling prices climbed 59%, from ₹5,826 to ₹9,260 per sq ft. The sharper movement in selling prices suggests that the cost of materials and labour alone cannot explain the increase. Land prices have become a major component of the equation, particularly in locations where new roads, transit links, commercial districts and other infrastructure are increasing development potential. Between 2021 and the first half of 2026, land values across the seven major markets increased by roughly 50% to 120%. The National Capital Region recorded some of the steepest increases, with prices rising between 70% and 130%. Bengaluru also saw substantial appreciation, ranging from 60% to 120%.

Because land expenditure is excluded from the reported construction-cost figures, the comparison between building expenses and final home prices can understate the pressure created by rising development land values. For buyers, this can translate into higher ticket sizes even when material costs are relatively stable. The trend also raises questions about how infrastructure gains are distributed. Better connectivity can increase land values around emerging corridors, but higher prices can push lower- and middle-income households farther from employment centres. Longer commutes can then increase household transport costs and add pressure to already congested urban networks. Construction itself has not escaped cost pressures. During the March-to-July period, steel prices rose by around 20%, while fuel and site logistics expenses increased by roughly 15–20%, adding to development costs.

The changing cost structure also has implications for RERA disclosures and buyer expectations. Clearer information on project costs, land arrangements, development charges and delivery commitments can help purchasers understand why prices differ sharply between projects and locations. For cities, the bigger challenge is ensuring that infrastructure-led growth does not become a trigger for exclusion. As land values continue to shape housing prices, urban planning will need to link transport, new development and housing supply more closely so that growth remains accessible rather than simply more expensive.

Also Read: India Tier 2 Cities Gain Ground in Office Demand

India RERA Rules Face New Housing Cost Pressures