India’s housing market may be nearing its peak, with luxury sales driving record-high values even as construction activity slows sharply, according to the latest Residential Market Report Q2 FY-26 by Liases Foras Real Estate Rating & Research.

The report reveals a 15% year-on-year rise in sales value, propelled by premium and ultra-luxury housing demand, but warns of a growing structural imbalance — as developers’ project commitments outpace actual construction progress, potentially undermining long-term market stability.

Luxury Segment Leads Value Growth, Affordability Stagnates

The core engine of market value growth is clearly the luxury segment. Apartments priced above ₹2 Crores experienced a 24% increase in sales volume, with the Ultra-Luxury segment (>₹10 Crores) leading all categories with a 40% YoY growth.

“The surge in high-value transactions propelled the total sales value to ₹8,27,764 Crore, masking flat unit sales volume (0% YoY) across the country,” stated Pankaj Kapoor MD Liases Foras. “Conversely, the Affordable (₹30-50 Lakhs) and Mid-segments (₹50-75 Lakhs) saw volume declines of up to 13% and 7% respectively, suggesting that the current growth cycle is highly concentrated at the top end of the market.”

The Structural Risk: Construction Slowdown

The most critical finding of the Q2 FY-26 report is the notable slowdown in the construction pace across the top eight cities, posing a significant risk to future deliveries and market stability.

The percentage of constructed supply against the total marketable supply has dropped dramatically from 75% in 2017 to just 57% in 2025.

“This widening gap between the promises of new launches and physical delivery is a serious concern. It implies slower revenue recognition for builders, increased execution risk, and greater potential for project delays,” the spokesperson added. “While builders’ commitments have soared, their delivery capacity has not kept pace, suggesting the current high sales volumes are not being matched by equivalent housing stock production.”

Key Regional Dynamics

•      The Mumbai Metropolitan Region (MMR) continues to dominate, accounting for the highest share of Pan-India sales value at 26% and registering an 8% increase in unit sales YoY.

•      The National Capital Region (NCR), despite ranking second in sales value, faces the highest internal risk, with 45% of its unsold inventory currently classified as stalled.

•      Tier 2 cities, while experiencing a 12% drop in sales volume, saw a stable new supply pipeline (0% YoY).

Outlook: Market Peaked

Liases Foras concludes that the market has likely peaked. Following a strong FY 2024-2025, sales volumes have shown a quarter-on-quarter decline in Q1 (3%) and Q2 (1%) of FY 2025-2026, signalling a potential stagnation in growth moving forward.