Housing sales to see steady growth; luxury segment to dominate new launches: Crisil

The premiumisation trend is set to continue, with luxury housing expected to make up 40% of launches in 2025–26, while the affordable segment may drop to 10-12%

Residential real estate developers are expected to see stable sales growth this fiscal and the next, as demand normalizes after three years of strong post-pandemic recovery. According to an analysis by Crisil, sales volumes are projected to grow by 5–7%, while average prices are likely to rise by 4–6%.

The premiumisation trend is set to continue, with luxury housing expected to make up 40% of launches in 2025–26, as per an analysis by Crisil (Picture for representational purposes only) (Pixabay)

The trend of premiumisation is expected to continue, with the luxury segment accounting for nearly 40% of total launches in calendar years 2025 and 2026, it said.

As growth in this segment stabilizes, price appreciation is also expected to moderate, with average prices projected to grow steadily at 4–6% over the medium term following the double-digit increases recorded in the past two fiscals, it noted.

Affordable housing expected to see only 10-12% new launches

In contrast, the affordable and mid-income segments are likely to see a much smaller share of new launches, 10–12% and 19–20%, respectively, during the same period. This marks a sharp decline from their 2020 levels, when they accounted for 30% and 40% of launches, respectively. Crisil attributes this drop to rising land and construction costs, which have made these segments less viable for developers.

While supply is expected to continue outpacing demand, leading to a marginal rise in inventory levels this fiscal and the next, developers are likely to maintain healthy credit profiles. Strong collections and deleveraged balance sheets are expected to support financial stability across the sector, it noted.

Crisil has analysed 75 real estate companies, accounting for around 35 per cent of the residential sales in the country.

“The premium and luxury segments in the top seven cities have witnessed a significant surge, with their share of launches increasing from 9% in calendar year 2020 to 37% in 2024. This can be attributed to rising incomes and urbanisation, which have fuelled the desire for larger, more luxurious living spaces,” said Gautam Shahi, director, Crisil Ratings.

“As the trend of premiumisation continues, the premium and luxury segments are expected to account for 38-40% of total launches in calendar years 2025 and 2026. With the growth in these segments normalizing, the average price is anticipated to grow at a steady rate of 4-6% over the medium term, following the double-digit growth seen in the previous two fiscals,” he said.