News Stocks India's Housing Cycle Loses Momentum in CY25 as Affordability Pressures Mount: NuvamaIndia's Housing Cycle Loses Momentum in CY25 as Affordability Pressures Mount: Nuvama
India's housing market experienced significant momentum loss in CY25, with Q4 marking the first quarterly sales value decline in four years at 6% YoY, according to Nuvama Institutional Equities. Full-year performance showed modest 4% sales value growth but 6% volume decline, reflecting mounting affordability pressures. Regional performance varied widely, with southern cities showing supply growth while western markets contracted, and inventory levels remained stable at 19 months pan-India despite weaker demand.
*this image is generated using AI for illustrative purposes only.
India's housing market concluded CY25 on a weak note, with clear signs of momentum loss emerging across key metrics, according to a comprehensive analysis by Nuvama Institutional Equities. The real estate sector, which had been riding a strong upcycle since CY21, faced its most challenging period as affordability pressures and luxury market concentration created headwinds for sustained growth.
Sharp Quarterly Decline Marks Turning Point
The fourth quarter of CY25 delivered the most pronounced slowdown in housing demand since the current cycle began. Key performance indicators revealed the extent of the deceleration:
| Metric | December 2025 | Q4CY25 | Significance |
|---|---|---|---|
| Sales Value Decline | 21% YoY | 6% YoY | First quarterly decline in 4 years |
| Full Year Sales Growth | 4% YoY | - | Modest growth despite headwinds |
| Volume Performance | 6% decline | 8% launch decline | Weaker underlying demand |
This marked the first year-on-year decline in quarterly sales value in four years, underscoring the significant shift in market dynamics. While full-year housing sales value managed to rise 4% year-on-year, launches by value remained flat, indicating developer caution.
Mixed Regional Performance Across Major Markets
City-level analysis revealed divergent trends across India's major real estate markets. Housing absorption declined year-on-year across all major cities in December, with the National Capital Region (NCR) experiencing the steepest decline.
Volume performance varied significantly by region during CY25:
Positive Growth Markets:
- Bengaluru: Volume pickup recorded
- Chennai: Volume pickup recorded
- NCR: Volume pickup recorded
Declining Markets:
- Hyderabad: Double-digit volume decline
- Mumbai Metropolitan Region (MMR): Double-digit volume decline
- Pune: Double-digit volume decline
Overall housing absorption volumes fell 6% year-on-year for CY25, reflecting sustained pressure on end-user demand despite relatively stable pricing across markets.
Supply Dynamics Show Regional Variations
Supply-side trends presented a mixed picture, with southern cities demonstrating resilience while other regions contracted. Housing launches by value increased 13% year-on-year in December but declined 13% in Q4CY25.
| Region | Launch Performance (CY25) | Year-on-Year Change |
|---|---|---|
| Chennai | Strong growth | +33% YoY |
| Hyderabad | Solid expansion | +24% YoY |
| Bengaluru | Moderate growth | +13% YoY |
| NCR | Slight decline | -4% YoY |
| Western Markets | Notable contraction | -13% YoY |
For CY25 overall, launches by value remained flat while volumes declined 8% year-on-year, suggesting developers are becoming more selective about new project introductions.
Inventory Levels Remain Stable Despite Volume Pressure
Despite weaker sales volumes, inventory management across markets remained relatively controlled. Pan-India inventory stood at 19 months in December 2025, unchanged from the previous month and only marginally higher than the 18 months recorded in December 2024.
Regional inventory variations highlighted different market conditions:
- Pune and NCR: Balanced at 14 months inventory
- Hyderabad: Elevated supply levels at 28 months
- Other major cities: Generally stable inventory positions
Low inventory levels continued supporting pricing power, with housing prices rising 5-13% year-on-year across the top seven cities during CY25, further intensifying affordability challenges for potential buyers.
Market Outlook and Strategic Recommendations
Nuvama maintains a cautious stance on real estate stocks despite recent valuation corrections since H1CY24. The brokerage expects muted volume trends to persist, with valuation multiples potentially facing continued compression due to growth visibility concerns.
For sustainable market recovery, Nuvama suggests developers should consider strategic recalibration by reducing luxury segment dependence and refocusing on mid-income and premium housing segments while improving affordability through contained prices and ticket sizes. Companies with substantial annuity or rental portfolios are expected to outperform pure-play residential developers in this environment, with Prestige Estates identified as the top sector pick due to its diversified business model and stronger earnings visibility.
20
