Mid-Income and Luxury Segments Drive Housing Growth
India's mid-income housing segment, comprising homes priced between Rs 10 million and Rs 30 million, recorded an 8% quarter-on-quarter (QoQ) and 16% year-on-year (YoY) increase in sales volumes during the fourth quarter of fiscal year 2026, according to a report by Elara Capital. The luxury segment, with average ticket sizes exceeding Rs 30 million, also saw robust growth, with volumes expanding 12% QoQ and 9% YoY.
In contrast, the affordable housing segment, where homes cost less than Rs 10 million, faced significant challenges. Sales volumes in this category plummeted 7% QoQ and 21% YoY, highlighting a persistent demand shift toward higher-priced properties.
Tier-I City Absorption and Regional Variations
Aggregate housing absorption in India's Tier-I cities grew 4% QoQ but remained nearly flat at 1% YoY in Q4 FY26, driven primarily by mid-income and luxury segments. The report noted substantial geographic disparities: Bengaluru and Kolkata emerged as top performers, registering double-digit growth of 11% to 23% in both QoQ and YoY metrics.
Bengaluru also recorded the sharpest quarterly improvement in new launch take rates, rising 12 percentage points QoQ and finishing 8 percentage points above its trailing eight-quarter average. However, the National Capital Region (NCR) experienced a decline, with Gurugram's take rate dropping by approximately 20 percentage points, contributing to a 600-basis-point drop across NCR compared to the eight-quarter average.
Inventory Overhang and Luxury Market Divergence
Inventory overhang across most markets remained broadly stable QoQ, but Gurugram saw an uptick of three months. The report stated, "Inventory overhang across markets was broadly stable QoQ but Gurugram saw an uptick of three months where we believe demand momentum is currently strong only for projects that have a pull factor vs push."
Annual luxury market performance varied widely by region. Gurugram was an outlier, with luxury sales volume falling 15% YoY; its share of luxury in total supply and absorption declined by 16 percentage points and 2 percentage points YoY, respectively. Conversely, Bengaluru witnessed the highest increase in luxury sales volume, up 55% YoY, accounting for 30% of total luxury sales volume growth in FY26.
Listed Developers Outperform Industry
For the full fiscal year 2026, large, organized developers increased their aggregate market share by up to 200 basis points YoY in both absorption volume and value. Listed firms continued to outpace the broader industry, with new launch take rates exceeding the industry average by 15 percentage points in Tier-I cities. Presales for listed firms jumped 21% YoY in FY26, comfortably beating the broader industry's value growth of 8%.
Strong execution was reflected in an 18% YoY growth in collections, while inventory overhang for listed developers settled at 13 months compared to 19 months for unlisted entities.
Commercial and Retail Segments Show Mixed Trends
In the commercial office segment, gross leasing maintained its quarterly run-rate above 20 million square feet, though net absorption fell 26% YoY and 27% QoQ. For retail, vacancy trends improved across most key markets, though Chennai bucked the trend with a 0.5 percentage point quarterly increase, and NCR vacancy rose 1 percentage point QoQ.
