India’s housing market is expected to stay on firm footing through the second half of 2026, even as the rapid post-pandemic boom gives way to a more measured phase of growth, according to a new report by Knight Frank India.The consultancy said the residential real estate sector is entering a period of consolidation rather than a downturn, with demand continuing to be supported by urbanisation, infrastructure expansion, lower borrowing costs and financially stronger developers. However, it noted that the market is becoming increasingly selective, with premium homes driving growth while affordable housing remains under pressure.“India’s housing market continues to reflect the stability of its strong fundamentals, with H1 2026 delivering one of the strongest half-year sales performances of the past decade. While growth has reduced following a steep recovery from pandemic lows, the market’s underlying fundamentals remain firmly intact,” said Shishir Baijal, international partner, chairman and managing director, Knight Frank India, as quoted by ANI.The report indicated that the extraordinary pace of housing sales seen after the pandemic is beginning to normalise. While buyer demand remains healthy, developers are launching more projects than the market is absorbing, leading to a gradual increase in unsold inventory. Price appreciation is also becoming concentrated in premium and luxury segments instead of being broad-based.This changing market dynamic reflected a shift in buyer preferences. Homes priced above Rs 1 crore accounted for 54 per cent of total residential sales during the first half of 2026, compared with 49 per cent in the same period last year, highlighting sustained demand from higher-income buyers.Meanwhile, affordability challenges continue to weigh on the lower end of the market, limiting supply in budget housing. Knight Frank said homebuyers are increasingly prioritising better locations, construction quality and long-term value over entry-level pricing.The report also expects lower home loan rates, following cumulative monetary easing, to provide additional support for housing demand in the coming months. At the same time, stricter regulations under RERA and improved financial discipline among developers are expected to reduce the risk of a sharp market correction despite rising inventory.If project launches continue to outpace sales, developers may increasingly turn to demand-boosting measures such as flexible payment plans, subvention schemes and stamp duty waivers to maintain momentum, the report said.India’s eight largest residential markets recorded 171,471 home sales in the first half of 2026, while developers launched 187,350 units, indicating that supply is beginning to run ahead of demand.Knight Frank said the sector’s performance in the remainder of the year will largely depend on how effectively developers balance fresh launches with buyer demand while maintaining pricing discipline. It added that continued infrastructure investment, stable employment conditions and urban migration should help keep the market resilient even as growth moderates.
