New Delhi, July 26 — India’s residential real estate sector posted its first annual growth in housing sales in 12 months this June, signaling a tentative recovery after consecutive declines in April and May. According to a UBS report, home sales (absorption) across the top eight tier-1 cities rose 2 per cent year-on-year, aided largely by the fading base effect from high-volume months last year.
While the year-on-year sales uptick broke the downward cycle, quarterly figures remained subdued, down 4 per cent compared to Q2 2024. Yet, analysts view June’s rebound as a turning point, indicating stabilisation in demand.
“Sales trends in June aligned with expectations, with YoY growth improving as base effects diminished,” the report stated.
City-wise performance was mixed. Gurugram led the recovery with an impressive 68 per cent jump in volumes, followed by Chennai at 24 per cent and Hyderabad at 15 per cent. In contrast, the Mumbai Metropolitan Region (MMR) saw a sharp 29 per cent decline, while Pune and Bengaluru dropped 27 per cent and 6 per cent, respectively.
Despite the divergence in volumes, price momentum remained strong across the board. Average housing prices across top cities rose 20 per cent YoY in June — a steep increase from 10 per cent in May. “Pricing growth remained firm across cities, aided by healthy inventory levels and a calibrated supply pipeline,” the UBS report noted.
Sequentially, prices held steady on a quarter-on-quarter basis, but still reflected a strong 14 per cent annual gain. Gurugram again topped the charts with a 40 per cent YoY surge in prices, while Chennai and Bengaluru followed at 21 per cent and 14 per cent, respectively. MMR, Pune and Hyderabad posted more moderate increases between 8 and 10 per cent.
Meanwhile, developers continued to exercise caution, with new residential project launches down 12 per cent YoY in June. This conservative approach helped keep inventory in check. The inventory-to-sales (I/S) ratio across major cities remained stable, rising marginally from 1.66x in May to 1.68x in June — a far cry from the 3x peak during the previous downturn.
However, inventory levels did rise in southern markets like Hyderabad, Bengaluru and Chennai, prompting some concern.
UBS analysts maintained a positive near-term outlook for markets like MMR and Gurugram, citing strong pricing and disciplined inventory levels. At the same time, they flagged risks in Bengaluru and Hyderabad due to increasing stockpiles.
As the sector enters the second half of the year, all eyes will be on whether sales momentum holds and how developers manage supply amid shifting demand and election-related uncertainties.
