India's residential property market experienced a 7% quarter-on-quarter decline in sales during Q1 2026, with housing sales across India's top seven cities falling to approximately 1,01,650 units from nearly 1,09,000 units in the previous quarter, according to Anarock's 'Residential Market Viewpoints Q1 2026' report. The slowdown is primarily attributed to geopolitical uncertainty linked to the West Asia conflict, which has pushed up oil prices, increased construction costs and triggered caution among homebuyers. As reported by Anarock, prospective Middle Eastern NRI homebuyers, who invest significantly in Indian real estate, appear to have temporarily deferred investment decisions amid geopolitical uncertainty.
Despite the softer sales momentum, developers have continued to aggressively launch premium projects, with homes priced above ₹1.5 crore accounting for 53% of all new launches during Q1 2026. This included high-end homes priced between ₹1.5 crore and ₹2.5 crore, luxury housing in the ₹2.5 crore to ₹4 crore bracket, and ultra-luxury homes priced above ₹4 crore. The shift highlights how developers are increasingly prioritising profitability over volume amid rising land and construction costs. At the same time, affordable housing continued to lose ground, with homes priced below ₹40 lakh accounting for just 10% of new launches, while the lower-mid segment contributed 12%.
The widening gap between launches and actual sales has resulted in unsold inventory crossing the six-lakh mark for the first time in recent quarters, reaching approximately 6,01,200 units by the end of Q1 2026. According to the report, this increase reflects healthy developer launch momentum meeting moderated absorption pace. Inventory overhang also increased to around 18 months nationally, compared with 17 months in the previous quarter, with Hyderabad recording the highest inventory overhang at 26 months and Bengaluru maintaining the lowest at 14 months due to stronger end-user demand. The latest data shows that current sentiment score fell to 49 in the March quarter from 60 in the December quarter, slipping into pessimistic territory as per the Knight Frank-NAREDCO Real Estate Sentiment Index.
Interestingly, home prices continued to rise despite softer sales, with average residential prices across the top seven cities rising 7% year-on-year and 2% quarter-on-quarter, increasing from ₹8,868 per square foot in Q1 2025 to ₹9,456 per square foot in Q1 2026. NCR recorded the steepest annual price rise at 15%, driven largely by luxury and ultra-luxury launches, while Bengaluru saw an 8% annual increase. New residential launches across the top seven cities rose 26% year-on-year and 2% sequentially to approximately 1,26,300 units in Q1 2026, with Mumbai Metropolitan Region leading with around 40,000 units. The moderation in sentiment has been driven largely by global uncertainties, with elevated crude oil prices intensifying inflationary pressures and raising construction costs.
Despite the near-term geopolitical disruption, Anarock Chairman Anuj Puri maintained that India's long-term housing demand story remains strong, supported by rising incomes, urbanisation and aspirations for lifestyle upgrades. The report noted that the current slowdown appears more like a temporary pause rather than structural weakening of the housing market. Looking ahead, developers are expected to focus more on project execution and timely delivery instead of aggressive launches, especially as elevated construction costs continue to pressure margins. The report also flagged emerging trends including senior living and age-targeted housing, and co-living and flexible housing formats expanding in major employment hubs. The government has also announced the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to support additional credit flow of ₹2.55 lakh crore, including ₹5,000 crore for airlines, to ensure businesses are not starved of working capital due to adverse impact of the West Asia conflict.
