Following a rapid two year increase, India’s is now shifting towards a steadier growth phase. It’s been reported that average prices in the housing market are expected to rise 4-5% in FY2025-26, a decrease from the previous double digit yearly growth. At the same time, home sales are projected to increase by 5-7% which indicates consistent demand after 3 years of recovery from the pandemic. This moderation comes as developers increase supply with unsold inventory reaching almost three years’ worth. Also, interest rate cuts are improving affordability as well.
Several real estate experts think that while the supply demand balance is stablising, strong end user demand, especially in the mid to premium segments, is stopping a steep decline. A poll by Reuters predicts a 6-6.5% price increase in 2025-26, driven by strong demand from the wealthy. Rents are also expected to rise by 7 to 10%.
In this situation, the key issue is whether now is the best time to buy or if patience would result in better prices. The answer depends on factors like your target segment (budget vs premium), timeline, financial comfort level and market demand across multiple housing types.
What’s Causing the Slowdown in the Housing Market?
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Past Surge is Now Stabilising
From FY2022 to FY2024, housing prices saw a compound annual growth rate (CAGR) of approx 14-26% due to strong demand and rising property values. With that peak behind, prices are leveling off.
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Supply Exceeding Demand
Builders increased new construction to meet the growing demand. With supply currently exceeding demand. Inventory levels have climbed up to 2.9-3.1 years of unsold stock. This decreasing leverage has moderated the rise in prices.
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Premium Segment Momentum
The premium and luxury residential segments continue to be at the top. In metro cities, launches in this category went up from 9% in 2020 to approx 37% in 2024, with predictions suggesting a 38-40% share in 2025-26.
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Policy Support
Even with a 50 basis point repo rate cut, mortgage rates stayed high. But still these reductions make buying more affordable especially for first time buyers.
So, Should You Buy Now or Wait?
In the current scenario, where there is persistent imbalance between demand and supply in the housing market of urban areas, rising input prices and inflation adjusted prices make the chance of a price drop very low. Though waiting might sound like a safe choice, it may also result in losing opportunities on current rates particularly in high demand micro markets.
The following factors can help you in making an informed decision.
Buy Now Only If:
Loan rates are manageable: A small adjustment in interest rates and consistent EMIs can allow buyers to lock in current prices and build equity.
Your Personal Timeline Aligns: If you plan to reside in the property for at least 5-7 years then price appreciation with time may cover short term fluctuations.
Your Target Segment is Premium or Luxury: They can excel in both demand and value growth in coming years.
When Waiting Can Be Rewarding
You’re Budget Conscious: A shortage in affordable and mid level supply might result in slight price adjustment or slower demand absorption in this category.
You’re Sensitive to Initial Expenses: If your budget is tight and you are unsure about rate cuts or prices then you can choose to pause which will prevent you from being at the higher end of the market.
The Bottom Line
Prices in the housing market in FY2025-26 are not skyrocketing but they are not declining either. Property values increasing by 4-6% and sales volumes by 5-7% show that the market is stable and is maturing. For long term investors and luxury homebuyers getting in now can become a solid base. First time or budget conscious buyers may gain from a moderated market outlook only if they get attractive deals. The decision to buy now or wait depends totally upon your timeline, category and risk appetite.
