Key Points

The report stated that the real estate market is likely to experience steady upward trends driven by sustained demand and rising input costs, as the market approaches a more balanced phase in FY26.

"Average residential price growth is expected to stabilise after 2024's 21% surge, with steady upward trends due to input costs and sustained demand," noted the report.

PhillipCapital report added that housing demand in 2025 will strengthen in key locations, supported by record launches and expanding supply from credible developers.

"The market is likely to be more balanced and differentiated, favouring projects with strong value, credible developers, prime locations, and infrastructure connectivity," noted the report.

The brokerage noted that while residential prices are likely to experience steady gains, tier-2 and tier-3 cities will continue to drive demand for affordable and mid-segment housing, supported by government schemes such as PMAY and the Smart Cities Mission.

"The mid-segment housing market in cities like Bangalore, Hyderabad, Pune, and Chennai is also experiencing good absorption - unsold inventory is being absorbed at a rate of 12-18 months, depending on the location," added the report.

Meanwhile, metros will continue to lead the luxury segment, supported by high-net-worth and foreign investors.

The report highlighted that rapid urbanisation, rising disposable incomes, and potential interest rate cuts would sustain India's housing momentum over the medium term. Despite affordability pressures from recent price surges, household income growth is expected to support purchasing power and overall absorption.

On the commercial front, the report highlighted that office leasing activity hit a record 79 million sq. ft. in 2024, with Bengaluru accounting for 28 per cent of total absorption. Retail markets also experienced one of their best years, with 13.5 million square feet of transactions across major cities.

"India's real estate sector reflects broader optimism surrounding the country's economic future, supported by government initiatives such as housing-for-all programs, infrastructure development, and pro-business policies," the report said.

- ANI