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Home Prices Rise Even as Affordability Remains a Concern: New Housing Index Report

India s residential property prices continued their upward trajectory in June, even as signs of slowing demand emerged in parts of the housing market. According to a newly released housing price index prepared in collaboration with academic researchers from the Indian School of Business , the All-India Housing Price Index (HPI), covering 13 major cities, recorded a sharp 14-point increase on an annual basis . The index also posted an 8-point rise compared to the previous quarter , highlighting sustained momentum in home price growth despite affordability pressures faced by buyers across income segments. The index tracks residential price movements in key urban markets including Ahmedabad, Bengaluru, Chennai, Faridabad, Gandhinagar, Ghaziabad, Greater Noida, Gurugram, Hyderabad, Kolkata, Mumbai, Noida, and Pune. Market Shows Maturity Amid Cost Pressures Experts associated with the study noted that India s housing sector continues to attract both end-users and investors as it matures structurally. While construction costs and affordability challenges remain, gradual improvements driven by policy reforms and taxation changes are expected to support demand, particularly in the mid-income housing segment. Reforms in indirect taxation and regulatory transparency are seen as long-term enablers for improved affordability, which is essential for sustaining housing demand at scale. Signs of Short-Term Stability in Pricing Economists involved in the research observed that although home prices remain higher on a year-on-year basis, the June quarter showed relative price stability in several markets. This suggests a brief moderation phase rather than a reversal of the overall growth trend. With inflation remaining under control and cumulative 100-basis-point reductions in interest rates during the first half of 2025 , housing demand especially for larger homes has remained resilient in metropolitan regions. Regional Performance Highlights NCR Leads National Growth The National Capital Region (NCR) emerged as the strongest-performing housing market , registering an exceptional 42-point annual rise in Q2 2025. Strong employment generation, investor confidence, and sustained interest in premium residential corridors have driven demand across both 2BHK and 3BHK categories, particularly in Noida, Greater Noida, and Gurugram. Bengaluru Maintains Momentum Bengaluru ranked second with a 24-point year-on-year increase , supported by steady demand from the technology workforce. Growth has been broad-based, with premium housing segments outperforming in southern and IT-centric zones. Hyderabad Shows Consistent Growth Hyderabad recorded a 20-point annual rise , reflecting stable demand across multiple micro-markets. Areas along the Outer Ring Road and western parts of the city witnessed notable appreciation. Mumbai Metropolitan Region (MMR) Despite being the country s most expensive residential market, MMR continues to see strong interest in luxury and ultra-luxury housing. Limited land availability and high redevelopment costs continue to support price appreciation. Kolkata Gains Traction Kolkata also posted meaningful growth, driven by demand for compact, value-oriented homes that align with local affordability preferences and improving lifestyle infrastructure. Configuration and Segment Trends Luxury housing continues to outperform, supported by demand from high-net-worth individuals, entrepreneurs, and overseas buyers. 3BHK and larger homes remain highly popular in major metros, reflecting post-pandemic preferences for additional space. Tier-2 cities continue to favour smaller, budget-friendly configurations, creating a balanced demand pattern nationwide. Conclusion India s housing market continues to demonstrate resilience, balancing price growth with evolving demand patterns. While affordability remains a pressing concern, supportive monetary conditions and sustained urban demand are likely to keep residential real estate on a growth path through 2025 and beyond.