India premium housing demand drives price growth

India’s housing market is increasingly being shaped by demand at the upper end, with analysts forecasting steady price increases as developers prioritise high-value residential projects. A Reuters poll indicates average home prices are expected to rise by about 5% annually through 2028, reflecting stronger activity among wealthier buyers and changing supply dynamics in major urban markets.

The forecast follows a 3.6% increase in home prices recorded in 2025, based on calculations derived from the Reserve Bank of India’s House Price Index. Analysts had previously projected gains of 6% for 2026 and 5% for 2027, but expectations now point to a consistent annual increase of around 5% over the coming years. The shift reflects a housing market increasingly influenced by affluent buyers whose purchasing power allows developers to pursue higher-margin projects.

Premium properties, typically defined by analysts as homes priced above 10 million rupees, have taken a growing share of residential sales. According to a report by JLL, this segment represented 63% of total housing sales in 2025, up from 53% the previous year. During the same period, overall residential sales declined by 11%, while demand for homes priced below 10 million rupees dropped by 31%, indicating a widening divergence between market segments.

Developers are responding by concentrating more resources on high-value housing developments. Analysts note that buyers in this segment are generally better positioned to absorb rising construction costs and price increases, reducing financial risk for builders. As a result, most analysts surveyed expect the supply of high-end homes either to increase or remain unchanged during the coming year, while demand is anticipated to hold steady or rise modestly.

Price increases are projected across major metropolitan areas including Mumbai, Delhi, the National Capital Region, Bengaluru and Chennai. Analysts expect property values in these markets to grow between 5% and 7% over the next three years, reflecting continued demand among higher-income households.

At the same time, the divergence between housing costs and household incomes is raising concerns about access to homeownership. Some analysts argue that as property prices rise faster than earnings, middle- and lower-income households may remain in the rental market for longer, reshaping housing patterns across India’s largest cities.