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India's Housing Sales to Stay Soft Unless Developers Shift to Mid-Income Segment

A Nuvama Institutional Equities report states that housing sales in India will remain soft unless developers reduce their focus on the luxury segment and reorient towards mid-income and premium housing. The report emphasizes the need to improve affordability by controlling prices and ticket sizes to support demand. It notes rising inventory levels, with unsold stock now at 20 months, and highlights that property prices have increased sharply in cities like Bengaluru. Despite corrections in realty stocks, concerns over affordability and slowing volume growth are expected to weigh on the sector.

Key Points: Housing Sales Soft Unless Focus Shifts from Luxury: Nuvama

  • Shift focus from luxury to mid-income
  • Control prices to improve affordability
  • Rising inventory pressures absorption
  • Tech cities lead sales but face high prices
2 min read

Housing sales to remain soft unless developers shift focus from luxury to mid-income segment: Nuvama

Nuvama report warns housing volumes will remain soft unless developers reorient towards mid-income & premium segments, improving affordability.

"housing volumes would remain soft until developers reduce focus on luxury segment - Nuvama Institutional Equities Report"

New Delhi, March 24

Housing sales in India are expected to remain soft in the coming months unless developers reduce their focus on the luxury segment and reorient towards mid-income and premium housing, according to a report by Nuvama Institutional Equities.

The report stated that developers need to improve affordability by keeping prices and ticket sizes under control to support demand.

"We argue housing volumes would remain soft until developers, reduce focus on luxury segment and reorient towards mid-income/premium segment and focus on improving affordability by keeping prices/ticket size restricted," the report noted.

It added that realty stocks have corrected after the first half of CY24, in line with falling volumes, despite strong pre-sales. This correction has been driven by a decline in valuation multiples, and the report expects this trend to continue amid concerns over pre-sales growth.

While maintaining a cautious stance on pure-play housing companies, the report highlighted that firms with sizeable annuity portfolios may perform relatively better.

The report also pointed out that housing sales and launches by value grew by 18 per cent and 17 per cent year-on-year, respectively, in February 2026. In volume terms, demand increased by 11 per cent year-on-year, while supply remained flat.

Tech-driven cities such as Bengaluru, Hyderabad and Chennai led housing sales during the month.

On a year-to-date basis, demand by value rose by 9 per cent year-on-year, while supply declined by 6 per cent, indicating a tightening supply scenario despite rising demand.

However, unsold inventory levels have increased to 20 months compared to 19 months in February 2025, reflecting pressure on absorption levels.

The report noted that ticket sizes have continued to rise due to higher prices and larger unit sizes, which has impacted affordability and contributed to declining volumes.

Inventory levels across India have also risen, with Pune, the NCR and Bengaluru reporting inventory levels of 13-16 months each. Other markets have inventory levels ranging between 19-22 months, except Hyderabad, which has the highest inventory at 27 months.

The report further highlighted that property prices have increased across most cities, with Bengaluru witnessing a sharp rise of 17 per cent year-on-year, while Chennai and the Mumbai Metropolitan Region (MMR) saw price increases of 10-13 per cent.

So the report cautioned that despite corrections in stock prices, concerns over affordability, rising inventory and slowing volume growth may continue to weigh on the housing sector in the near term.

- ANI

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Reader Comments

S
Sarah B
As someone working in tech in Hyderabad, I see this daily. Prices have gone crazy post-COVID. My salary increased, but not enough to keep up with 10-15% yearly price hikes. The focus on larger units makes it worse. We need sensible 2BHKs in good locations, not just 3BHK+ mansions. 🏠
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Arjun K
Absolutely correct analysis. The unsold inventory piling up is a clear sign of misalignment. In Pune, so many luxury towers are half-empty. Meanwhile, my cousin has been searching for a decent 1 BHK under 80 lakhs for a year. Demand is there, just not for what they're building.
P
Priya S
I respectfully disagree with the report's implied solution. The problem isn't just developer focus. Land costs, municipal charges, and GST are huge. Asking builders to slash prices isn't sustainable. The government needs to intervene to reduce input costs for affordable housing projects.
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Karthik V
The data on Hyderabad is shocking! 27 months of inventory? Builders there went overboard. It's a classic bubble. They kept launching projects assuming the IT boom would never end. Now reality is setting in. Hope they learn and correct course.
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Michael C
Interesting read. The trend of larger unit sizes is a global one, but in India with the population density, it seems particularly ill-suited. Compact, well-designed, mid-income homes in integrated townships are the future. The "premium" segment they mention should be about quality of life, not just square footage.

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