'The momentum is driven by rising affluence, strong demand from HNIs (high net worth individuals) and NRIs (non-resident Indians), an increased appetite for larger, well-located homes by branded developers, and support from the economy.'
The housing market remains resilient, with unsold inventory across the top eight cities rising just 4 per cent year-on-year (Y-o-Y) to 506,000 units in the third quarter (Q3) of 2025.
The quarters-to-sell (QTS) ratio of 5.8 quarters (about 17.4 months) also remains comfortably within the healthy range of 18-24 months, according to a recent report by PropEquity, an NSE-listed data analytics firm.
This overall stability, however, masks emerging risks in specific segments. Unsold homes in the ₹2-5 crore bracket have surged 47 per cent Y-o-Y, requiring end-users and investors to proceed with caution.
Post-Covid surge in demand
Data from Anarock shows that premium and luxury segments have expanded sharply since 2019, with their share of total sales rising from 7 per cent in Q1 2019 to 21 per cent in Q1 2024. This trend of expanding share has continued in 2025.
"These segments account for 38 per cent of new supply across the top seven cities. The momentum is driven by rising affluence, strong demand from HNIs (high net worth individuals) and NRIs (non-resident Indians), an increased appetite for larger, well-located homes by branded developers, and support from the economy.
"Even as Q3 2025 sales volumes dipped 9 per cent, total market value rose 14 per cent, driven entirely by the premium segment," says Santhosh Kumar, vice chairman, Anarock Group.
Rising premium inventory
Some experts are of the view that the rise in premium inventory reflects portfolio expansion rather than distress.
"Developers have broadened offerings amid strong post-pandemic demand, lengthening absorption cycles. Buyer sentiment remains firm yet more discerning, indicating market maturity rather than a slowdown. Backed by steady wealth creation, NRI inflows, and trust in branded projects, current inventory is well positioned to be absorbed in the coming quarters," says Sam Chopra, president and country head, eXp Realty India.
How inventory is measured
Inventory levels are assessed using the QTS ratio, which estimates how long current stock would take to sell at the prevailing pace.
"A QTS of 6–8 quarters (18–24 months) indicates a healthy balance between supply and demand. Over 24–30 months signals slower movement or price resistance, while below 12 months reflects strong sales and constrained supply," says Chopra.
Impact on prices
In the mid and premium segments, elevated unsold inventory typically restrains price growth. Buyers gain leverage and developers defer new launches due to stretched cash flows.
Luxury and ultra-luxury segments, however, behave differently. "While short-term demand may dip temporarily due to stock market fluctuations and macroeconomic uncertainty, the inherent demand for such homes remains strong. The well-capitalised developers in these segments can wait out the troughs without offering discounts," says Kumar.
"When inventory builds up, developers typically pivot to flexible payment plans, limited-period offers, or experiential upgrades rather than outright price cuts. This moderates price growth while sustaining market stability," says Chopra.
End-users and investors impacted differently
End-users and investors experience the effects of high inventory differently. "Homebuyers often gain from better affordability and stronger bargaining power," says Anupam Rastogi, cofounder and chief business officer, NRI Real Estate, Square Yards.
For end-users, the main concern is the project's financial viability, particularly if the developer faces liquidity pressure.
"End-users face project delays when developers stall launches due to cash-flow problems," says Kumar.
"Delays in completion or community development can hinder neighbourhood growth and infrastructure, while market perceptions may impact future resale value and financing options," says Rastogi.
Investors, especially those with a short horizon, face a different set of challenges. "They have to contend with lower rental yields, slower capital appreciation, and longer holding periods. The impact is typically sharper in premium and luxury segments, where demand recovery takes more time," says Rastogi.
"Investors holding speculative inventory risk value depreciation and delayed returns. Wealthy buyers may, however, seize opportunities for distressed or bulk purchases," says Kumar.
End-users: Go with well-funded developers
In high-inventory markets, buyers should try to minimise the risk of project delays by going with financially strong developers. Regulations offer an additional layer of protection.
"RERA (Real Estate Regulation and Development Act) obligations require developers to complete projects within stipulated timelines, offering an added layer of protection," says Deepak Mishra, director, residential transaction services, Colliers India.
Risks can be further mitigated by avoiding under-construction properties. "Prioritise ready-to-move or near-completion projects from reputable developers. Consider resale properties under five years old," says Kumar.
Investors: Select micromarket carefully
Investors may have to cope with slower price appreciation and longer holding periods, and hence need to be cautious. "On the positive side, selective opportunities may exist in distressed or undervalued assets for those with a longer horizon," says Rastogi.
He adds that investors should focus on yield optimisation, portfolio diversification, and a balanced, counter-cyclical approach.
Investors must also avoid concentrating all their capital in a single market. "Diversifying across multiple micro-markets helps mitigate risk, enhances portfolio resilience, and improves long-term returns," says Mishra.
He suggests that investors can mitigate some of the impact by taking advantage of the innovative and flexible payment plans that become available.
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