Two reports on real estate agree, and disagree with each other. One by Knight Frank India, and the other by MagicBricks, conclude that the demand for housing units in the country is on the rise. Although they accept that the growth rate is low, though positive, their figures do not match. Knight Frank’s study in top eight residential markets, which include the obvious cities such as Mumbai, Chennai, Delhi, and Bengaluru, concludes that demand inched by a single per cent Year-on-Year (YoY) in the July-September 2025 quarter.
During the same period, according to MagicBricks, the housing demand rose by a higher 3.1 per cent YoY year-on-year. Knight Frank finds a two per cent YoY decline in new launches, or fresh availability. As per the other report, the nationwide supply expanded by a minimal one per cent. Maybe these differences on demand and supply lie in the geographies. While Knight Frank focuses on the eight largest cities, MagicBricks’ data relates to the entire country. Of course, there are variations between the cities and towns.
However, there is another major discrepancy. According to Knight Frank, there is a perceptible shift towards premium, or more expensive, housing. The share of units priced below Rs 1 crore each fell from 54 per cent in Q3 2025 to 48 per cent this year. There was strong buying within the Rs 1-2 crore segment, but the Rs 10-20 crore one recorded a huge rise of 170 per cent in sales. There was obviously a “growing appetite for luxury homes among urban buyers.”
“Premium housing has decisively taken centre stage, accounting for more than half of all sales this quarter. The strength of the Rs 1-2 crore segment underscores a structural shift in buyer demand,” says Gulam Zia, Senior Executive Director, Knight Frank India. There is desire and urge, as well as action, among the buyers to walk into bigger houses. Affordable housing is not for the urban consumers.
MagicBricks’ figures indicate that the demand for the compact and smaller 1-2 BHK (Bedroom, Hall, and Kitchen) surged to 54 per cent of the total searches on its websites during the same quarter. “The July-September 2025 quarter reinforced a fundamental market shift toward compact and mid-segment housing. While affordability constraints are shaping buyer behaviour, infrastructure-led optimism, and evolving consumer aspirations… fuel demand across key micro-markets,” says Sudhir Pai, CEO, MagicBricks.
Yet again, there seems to be a clash of mindset, and aspirations between those who live in the top cities, and those who dwell in towns. While the former are enthused by the confidence that their incomes will rise, and they can afford larger residences, the latter consider costs as a major factor to make their first purchases. Moreover, there may be supply factors to contend with. It is logical to presume that the bigger cities will offer a larger number of bigger houses, compared to the smaller cities and towns.
During the quarter under study, Mumbai accounted for 28 per cent of the sales, which translated into 24,700 of the 87,600 units sold. Chennai was at No. 2, with a YoY growth of 12 per cent, albeit on a small base of just over 4,000 units. But the growth figure was the highest since the pandemic. Markets like Delhi and Bengaluru remained robust, but Pune witnessed a decline of eight per cent. Thus, according to Knight Frank, there was a wide variation among the top eight real estate markets in India.
MagicBricks found similar differences among the major cities. Mumbai witnessed a 29.6 per cent YoY growth during the quarter. The figure is nearly the same as Knight Frank’s. So is the case with Delhi-NCR, which witnessed a strong growth of more than 10 per cent, thanks to major infrastructure projects such as Dwarka Expressway, Delhi–Meerut RRTS, and Noida International Airport. But Pune, which was a laggard according to Knight Frank, recorded a more than 40 per cent jump in prices, as per MagicBricks’ figures.
However, one cannot deny that the housing market’s resilience is underpinned by improving macroeconomic fundamentals. According to Knight Frank, inflation eased to just over two per cent in August 2025, down from 3.65 per cent a year earlier. Repo rates, the rates fixed by the central bank, and followed by other banks as benchmarks, were down by 100 basis points since end-2024. Fiscal measures (tax and GST simplification) supported end-user confidence. Lower financing costs and price momentum drove the demand for compact and premium houses simultaneously.
“India’s residential market has demonstrated an impressive ability to sustain momentum and is now in its fifth year of an upcycle. Within a volatile geopolitical environment, India’s macroeconomic conditions remain stable,” feels Shishir Baijal, Chairman & MD, Knight Frank India. “The balance between demand and supply will remain crucial in sustaining momentum. Looking ahead, housing activity is expected to be driven less by speculative trends and more by pragmatic, end-user decisions,” adds Sudhir Pai, MagicBricks.
As per both reports, India’s residential real estate market is moving toward a measured growth phase. MagicBricks contends that affordability will continue to shape buyer behaviour, making compact housing a dominant trend. Knight Frank thinks that the premium segment will remain buoyant due to upgradation. Infrastructure development in Delhi, Pune, Bengaluru, and Hyderabad, state both reports, will anchor demand. Lower interest rates in the future, as the central bank expects, will fuel demand.
Not to forget the impact of GST 2.0, which reduced the tax rates on several inputs such as cement, steel, tiles, and paint. According to a blog on JK Cement’s website, “Rs 25-lakh homes are possible in 2025.” For smaller houses (800-900 sq ft), the math indicates that there may be savings of more than Rs 1 lakh per unit for the builders. But not everyone is gung-ho. Some experts feel that affordability will depend on the “type of property you are eyeing, and whether it is under construction, or ready to move in.”
While under-construction homes, for instance, will benefit from lower GST on the unit, and lower taxes on inputs, developers cannot claim Input Tax Credit, or refunds on GST paid on raw materials like cement and steel. It depends if the realtors pass on the benefit of the taxes, especially if they take inflation and other costs over the construction period, which may range from one to three years. Most projects are delayed due to internal and external factors, and developers will now use the financial buffer.
