Homebuyers are going premium: ICRA expects housing sales value to rise 8-11% in 2026-27

Residential property sales value in India's top seven cities is expected to grow 8-11% in 2026-27, driven by premiumisation and higher realisations, even as the area sold is likely to rise at a modest pace, rating agency ICRA said on Wednesday.

The sales area in the top seven cities is projected to increase 2-5% to 665-685 million square feet (msf) in 2026-27, while average selling prices are expected to rise 4-7%, according to ICRA.

Sales value is estimated to grow at a compound annual growth rate of 7-9% to ₹7.7-8.2 lakh crore between 2023-24 and 2026-27, even though the area sold is expected to remain broadly flat over the period.

"ICRA projects the area sold in the top seven cities at 665-685 msf in 2026-27, supported by sustained demand in the mid-and-luxury housing segments and an increasing preference for established listed developers," Anupama Reddy, ICRA Group Head and Vice President, Corporate Ratings, said.

Launch activity is expected to increase 4-7% to 760-785 msf in 2026-27, aided by comfortable inventory levels, she said.

Developers' calibrated approach to launches is expected to keep the market balanced, with the years-to-sell ratio likely to remain at a comfortable 1.4-1.6 times by March 2027, Reddy added.

According to ICRA, the area sold rose marginally by 1.5% to 653 msf in 2025-26, amid a slowdown in project launches for much of the year.

Launch activity improved 5% year-on-year in the first nine months of 2025-26 before rebounding sharply with an 18% increase in the March quarter.

Demand remained resilient in the luxury segment, where area sold grew 14%, while the mid-income segment registered a 2% increase.

The affordable segment, however, saw a 9% decline.

In the first quarter of 2026-27, area sold increased 9% year-on-year, largely driven by projects launched in the preceding quarter, ICRA said.

The premiumisation trend has continued, with mid-income and luxury housing accounting for 34% and 46%, respectively, of sales volumes in 2025-26.

The unsold stock increasingly concentrated in the mid and luxury segments, while the share of affordable housing has declined.

ICRA also noted growing consolidation in the residential real estate sector, with the market share of key listed developers rising to around 23% of total industry sales value in 2025-26 from 15% in 2020-21.

The trend reflects a growing preference among homebuyers for developers with established brands, stronger execution track records and better access to capital, it said.

Prominent listed developers are expected to continue outperforming broader market growth, supported by robust collections, healthy operating cash flows and comfortable leverage levels, according to ICRA.

The rating agency maintained a ‘Stable’ outlook for the residential real estate sector.