End-user home buyers control market

Akash Pharande

Recent headlines from leading real estate consultancies, as well as commentary from self-styled experts, seem to indicate that Indian housing sales  are slowing down alarmingly. They mention double-digit drops in sales volumes in all the major cities. Not surprisingly, though perhaps not intentionally, these agencies and agents have caused concern among hopeful homebuyers – is the market in bad shape? Is now not a good time to buy a home?

Let’s take a closer look at the data and market dynamics behind it and see if these fears are justified or misplaced for genuine end-users.

What the Headlines Say

• A recent report by one real estate consultancy states that there has been a 20% drop in housing sales across the country’s top seven metropolitan cities in Q2 2025 when compared to the same period last year. The Mumbai Metropolitan Region (MMR) saw a 25% decline.
• Another real estate agency estimates that there was a 23% annual sales decline in Q1 2025 across nine major cities and says that this drop is because of high prices and worries about India’s economic growth.
• Yet another agency found a 19% year-on-year decline in housing sales in Q1 2025, and that there was also a 10% decline in new launches.
• The consensus, if there is one at all, seems to be that premium and luxury housing has been most affected and that unsold stock in these segments is now high and may increase further.

While most of these agencies don’t say so, the impression these figures seem to signal is that the Indian housing market is now entering a downturn phase. Others seem to imply that perhaps, aspiring homebuyers should hold put off purchases for now.

What the Data Really Means

1. This is a correction, not a crash

• We should remember that the recent slowdown comes on the heels of three years of record-breaking sales and supply infusions after the Covid-19 pandemic. These levels were in any case not sustainable, and everybody knew it.
• The current decline is the kind of market correction which always follows a massive boom. It is not a sign of systemic weakness.

2. Investors are withdrawing, not end-users

• A major part of the current drop in sales is in the premium and luxury segments, which are heavily investor-driven segments. Very simply, speculative buying has caused prices to go too high in these segments and in some areas.
• One of the real estate consultancies referred to above clearly mentions that investors make up less than 10% of housing buyers now, and that the market is primarily served by end-users — people who buy homes to live in them, not rent out or to flip for quick profits.
• The pain that these experts infer is clearly in the premium and luxury segments while it is the affordable and mid-segment housing segments that most Indian end-users focus on. In these segments, there is less supply now because most big developers started focusing on the higher-margin categories – but demand and therefore sales in them remains robust

3. End-users now enjoy much better affordability

• Home loan interest rates are on the decline – the RBI has cut the repo rate by 100 basis points this year to date, so EMIs have become much more manageable.
• There are still Government schemes such as PMAY and various state-level incentives for first-time and affordable housing buyers in any part of the country.
• In most major cities, the affordability of housing has improved to its best levels since the Covid-19 pandemic.

For example, Pune and Pimpri-Chinchwad (PCMC) housing affordability has improved significantly with Pune’s affordability ratio now at 22% – making it the 2nd-most affordable major Indian city after Ahmedabad. PCMC has seen an 80% rise in housing sales and a 155% increase in property values since 2020, and it remains very affordable.

In Ahmedabad, homebuyers now have to spend only 18% of their annual household income on EMIs, which is very much under the 40% affordability threshold.

Even Mumbai, notoriously the least affordable city of India, has seen its affordability ratio drop below 50% for the very first time.

Why Genuine Homebuyers Should Ignore the Headlines

1. End-users buy homes to live in them, not to turn profits

• Most homebuyers in India buy homes to live in them, not as speculative assets. The security, stability, and long-term wealth creation potential of ownership housing remains intact, regardless of what the short-term sales trends are.
• End-users are not concerned with the volatility that upsets investors – who are far more concerned about price cycles and liquidity issues.

2. End-users benefit from the current market conditions

• Many builders are now offering attractive deals, including discounts, flexible payment plans, and various add-ons, to attract end-users.
• Rental values are rising constantly in most major Indian cities, often making owning a home a lot more financially viable than continuing to live in rented homes – especially given the current interest rates and tax benefits.

3. India’s long-term fundamentals remain strong

• Our GDP growth is still very robust, and household incomes are going up. This strongly supports long-term housing demand.
• The real estate sector is growing at a CAGR of over 24%, and housing remains – by far – the most incentivized asset class in India. No other asset class offers comparable tax breaks and other financial benefits.
• Homeownership remains the most aspirational goal for most Indians, and India’s rapid urbanization, the constant increase in nuclear families, and ever-rising migration into our cities will always guarantee steady end-user demand for housing.

Buying a Home Makes More Sense Than Ever

No doubt, the market slowdown that these consultancies and experts report is real. But its implications need to be understood better. We are looking at data which shows that speculative activity, especially in the luxury segments, is cooling off after an unsustainable boom. This is not a collapse in end-user demand, or a crisis in the system. For genuine homebuyers, the fundamentals remain as strong as ever.

In fact, end-users are now firmly in control of the housing market and face far less competition from investors. They have more bargaining power than ever before. For those who are looking to buy a home to live in, the current market environment is, in many ways, more favourable than ever. Let the headlines spook investors – for end-users, this is the right time to make the most important investment of their lifetimes.

Akash Pharande is Managing Director – Pharande Spaces,
a real estate construction and development firm