Residential sales in India’s seven major cities are expected to decline by up to 3% year-on-year in FY26, reaching 620-640 million square feet (msf). This forecast is based on a moderation in sales velocity, according to ratings agency Icra. In comparison, sales in FY25 stood at 643 msf, which was an 8% decrease from the previous year. The decline in sales was attributed to a sharp contraction in new launches and a moderation in demand, particularly in the affordable and mid-income segments.
The slowdown in the residential sales market follows a period of strong growth, with the sector posting a compound annual growth rate of 26% in area sales between FY22 and FY24. Icra noted that after experiencing a strong upcycle, the sector has entered an equilibrium phase, characterized by a balance between supply and demand. The agency’s forecast suggests that the market is expected to stabilize, with sales declining only marginally in FY26.
The decline in sales is likely to be driven by a moderation in demand, particularly in the affordable and mid-income segments. This could be due to various factors, including increased interest rates, higher property prices, and a slowdown in economic growth. Additionally, the contraction in new launches is expected to continue, which could further impact sales.
Despite the decline, the residential sales market in India’s seven major cities is expected to remain relatively stable. The market has experienced a strong upcycle in recent years, and the current slowdown is likely to be a correction rather than a downturn. Icra’s forecast suggests that the market is expected to stabilize, with sales declining only marginally in FY26. However, the agency’s projection is subject to various risks and uncertainties, including changes in government policies, interest rates, and economic growth. Overall, the residential sales market in India’s seven major cities is expected to experience a moderate decline in FY26, but the market is likely to remain stable in the long term.