India's housing market is undergoing a significant shift from a volume-led growth cycle to a price-driven premiumisation phase, with a moderation in housing price growth anticipated in calendar year 2026 (CY26), according to a report by Nuvama.
Sales Value Surges, Volumes Lag
In May 2026, housing sales value rose 17 per cent year-on-year (YoY) and 2 per cent month-on-month (MoM), driven primarily by southern cities which recorded the strongest annual growth. However, sales volumes grew only 6 per cent YoY during the same period, indicating that buyers are opting for more expensive homes rather than purchasing in greater numbers.
On a year-to-date (YTD) CY26 basis, housing demand by value surged 13 per cent YoY, led by Bengaluru (+39 per cent YoY) and Chennai (+26 per cent YoY). Absorption in Kolkata and the Mumbai Metropolitan Region (MMR) increased 11-13 per cent YoY, while other major cities posted growth of 4-8 per cent YoY.
Launches Decline Across Most Cities
In contrast to sales, new housing launches by value declined 18 per cent YoY and 12 per cent MoM in May 2026, falling across all cities except Hyderabad. By volume, launches fell 14 per cent YoY and MoM at the pan-India level across the top seven cities.
The report noted that the premiumisation trend remains strong, as evidenced by the fact that the rise in sales value (up 17 per cent YoY) significantly outpaced the rise in sales volumes (up 6 per cent YoY) across the top seven cities in May 2026.
Premium and Luxury Housing Driving Price Growth
Premium and luxury housing demand continues to support price growth across major markets. Average prices rose 18-19 per cent YoY each in the National Capital Region (NCR) and Chennai in May 2026, followed by an 11 per cent YoY expansion in Bengaluru. The report added that increases in average prices and unit sizes have led to a surge in ticket sizes across geographies.
Structural Concerns Persist
Nuvama believes that structural concerns around weak housing volume growth are unlikely to ease meaningfully in the near term. The report attributes this to deteriorating affordability, limited supply of mid-income homes, and subdued job creation amid tariff-related uncertainties and a K-shaped economic recovery.
According to Nuvama, "housing volumes would remain soft until developers: i) reduce focus on luxury segment and reorient towards mid-income/premium segment and ii) focus on improving affordability by keeping prices/ticket size restricted."
Price Growth Forecast
Unless developers take a concerted decision to target the mid-income segment, housing volumes shall remain sluggish in the near term. The report forecasts a moderation in housing price increases in CY26, stressing that "price appreciation will be in mid-single digit at best."
