Mid-Income Homes Poised to Lead India’s Housing Market in 2026 as Premium Demand Plateaus: Square Yards

After years of post-pandemic momentum driven largely by premium and luxury housing, India’s residential real estate market is showing signs of recalibration. The mid-income housing segment is expected to emerge as the primary growth driver in 2026 as affordability dynamics improve and premium markets approach saturation, according to a new report by PropTech platform Square Yards.

The report, 2025 Recap, 2026 Outlook: Residential Real Estate, highlights that overall activity in 2025 reflected a shift from volume-led expansion to value-led growth. Across nine key residential markets, registered home sales declined 5% year-on-year in 2025. Despite the moderation in transaction volumes, total sales value rose more than 11%, underlining the continued resilience of the sector.

This divergence was largely driven by a sharp increase in ticket sizes. Average deal values climbed 22% during the year, indicating that higher-priced homes continued to dominate value contribution even as fewer units changed hands. Premium and luxury housing, particularly in mature urban markets, remained a significant contributor to sales value.

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Regionally, western India accounted for over 80% of total registered residential sales value in 2025, supported by elevated price points and strong demand in markets such as the Mumbai Metropolitan Region. Southern cities, including Bengaluru and Hyderabad, continued to see steady end-user participation, reinforcing their position as structurally strong housing markets. In contrast, the National Capital Region displayed a more segmented demand profile, with affordable and mid-range homes driving transaction volumes.

Tanuj Shori, Founder and CEO of Square Yards, noted that sustained price appreciation over the past three to five years has begun to stretch affordability in several premium micro-markets. While demand for luxury housing remains intact, incremental growth in this segment is expected to slow in 2026, signalling a phase of stabilisation rather than a downturn.

Looking ahead, the report suggests that the housing market is moving towards equilibrium. With price growth moderating in saturated markets and housing inflation easing, affordability for mid-income buyers is likely to improve. Homes priced between ₹80 lakh and ₹1.5 crore are expected to see rising traction, supported by stable pricing, improved project quality and infrastructure-led expansion into peripheral urban corridors.
Overall, Square Yards expects 2026 to be characterised by steady transaction volumes, elevated average ticket sizes and a broader, end-user-led demand base anchored in the mid-segment, setting the stage for more balanced and sustainable growth.