Real Estate Sector To See Single-Digit Price Rise In 2025: Experts

The real estate sector also anticipates fiscal incentives in the upcoming Union Budget to stimulate both supply and demand, particularly in the affordable housing segment

The real estate industry has long advocated for an increase in the deduction limit for home loan interest under the Income Tax Act

Source : ABPLIVE AI

India’s primary housing market is expected to experience a modest single-digit price increase in 2025, following a robust 21 per cent growth in 2024. This predicted slowdown is due to developers ramping up new supply to meet growing demand, according to industry experts. 

Many real estate developers and property consultants are hopeful that the Reserve Bank of India (RBI) will cut the repo rate in 2025, leading to a reduction in home loan interest rates.

The real estate sector also anticipates fiscal incentives in the upcoming Union Budget to stimulate both supply and demand, particularly in the affordable housing segment, which has seen a decline in momentum over the past few years.

In 2024, for the first time since the pandemic, new home sales across seven major cities witnessed a decline. This drop was largely attributed to soaring housing prices and persistently high borrowing costs, which dampened buyer interest. According to data from consultant Anarock, new home sales fell 4 per cent in 2024, totalling 459,650 units across Delhi-NCR, Mumbai Metropolitan Region, Kolkata, Chennai, Hyderabad, Bengaluru, and Pune. New supply also declined by 7 per cent, amounting to 412,520 units.

This was the first decrease in sales after three consecutive years of strong growth post-COVID, which followed a 47 per cent decline in 2020. Sales had surged by 71 per cent, 54 per cent, and 31 per cent in 2021, 2022, and 2023, respectively. Despite the 2024 dip, the market is still recovering from a sharp fall in 2020 when sales plunged from 261,355 units in 2019 to 138,350 units due to the pandemic. Sales then bounced back, reaching 236,510 units in 2021, 364,880 units in 2022, and 476,525 units in 2023.

Anarock Chairman Anuj Puri predicts that the housing market will stabilise in 2025, with a more muted growth in prices. "Much also depends on what the upcoming Union Budget holds in store," Puri noted.

The real estate industry has long advocated for an increase in the deduction limit for home loan interest under the Income Tax Act, especially to boost housing sales in the affordable and mid-income segments.

NAREDCO National President G Hari Babu is optimistic about the continued growth of the real estate sector in 2025, driven by a stable economy and supportive government measures. 

CREDAI National President Boman Irani, however, pointed out that the sector still faces "policy-related roadblocks" that hinder its potential. He emphasised the need for government interventions to streamline policies, especially in the affordable housing space.

Irani also called for a redefinition of affordable housing, an expansion of 80C benefits, and a reduction in interest rates to foster growth in India’s real estate market, which was valued at nearly $500 billion in 2022 and is expected to reach $5.8 trillion by 2047, according to a Naredco-Knight Frank report. Similarly, reports from CREDAI and Colliers estimate the market size to grow to $5-7 trillion by 2047.

Experts believe that consolidation within the real estate sector will continue, with increasing demand for reliable, reputed builders over smaller or less-established players. As a result, major real estate companies have aggressively pursued land acquisition, either through outright purchases or partnerships with landowners, a trend that is expected to persist in 2025 and beyond.

CREDAI has also advocated for the government to assist in increasing the availability of land to meet the growing need for residential and commercial properties, in line with India’s rapid urbanisation and overall economic growth.