Bengaluru sees 78% housing price jump in 5 years, Mumbai becomes costliest

Residential property prices across India's major cities have surged by an average of 48% in the last five years. This significant increase is highlighted by The 1 Finance Housing Total Return Index (TRI), which climbed from 167 in 2020 to 247 in 2025, signaling a strong growth phase in the housing cycle.

 

The 1 Finance Housing TRI, which uses a weighted average methodology considering per square foot rates, rental yields, and population in individual cities, aims to provide an accurate reflection of market dynamics. 

Indian Real Estate Prices Surged 48% in Last 5 Years – Have Property Prices Peaked?

 

 

Here are the key highlights of the report: 

 

• Bengaluru leads the pack with a remarkable 79% increase in real estate prices over the last five years, showcasing its continued attractiveness as a residential hub.
• Mumbai has solidified its position as India's most expensive residential market, with prices reaching ₹26,975 per sq ft.
• Pune developers have responded strategically to market conditions, reducing new launches by 20% over the past five years.
• Hyderabad faces a significant challenge with a 177% surge in unsold inventory, indicating a substantial oversupply in the market.
• Delhi NCR demonstrates robust market demand, evidenced by a 30% decline in unsold inventory over the same five-year period.
• Chennai presents a supply-demand imbalance, with new launches growing by 51% but sales increasing by only 10%.
• Kolkata's market has seen contraction, with both new launches and sales declining by 29% over the five years.

 

Methodology

The PSF rates are calculated by using the historical transaction data for available RERA-registered residential units’ sales value and area. The 5-year total returns are calculated on the basis of the above PSF rate and rental yield. Mumbai and Pune prices are per carpet area; other cities are per super built-up area. 

 

The following table illustrates the housing market insights. Substantial supply expansion by developers alongside diverse demand trends across cities.

 

The PSF rates are calculated by using the historical transaction data for available RERA-registered residential units’ sales value and area.

  The Buyer's Dilemma: Opportunity vs. Overpayment

 

Animesh Hardia, Senior Vice President of Quantitative Research at 1 Finance, sheds light on the prevailing sentiment among potential homebuyers. "We're seeing two very different stories," he notes. "Clients who already own a property are benefiting from the recent price appreciation, but it's the potential buyers who are facing a challenge. Many are worried about missing out while also being concerned about buying at peak prices, and this uncertainty is pushing them to make rash, emotional decisions."

 

Hardia emphasizes the critical need for objective advice in such a dynamic market. "What these buyers really need is a combination of a real estate expert and a financial advisor – qualified people who can look at the numbers objectively and help them make an informed decision, whether a purchase makes sense for their life and financial situation, rather than getting caught up in market hype or family pressure."

 

Have property prices peaked?

 

Between 2020 and 2025, new home launches across India's major cities increased by 10%, while sales jumped by 33%, indicating that demand outpaced supply. Despite a 32% increase in unsold homes, prices rose by 48% over five years, suggesting that the Indian real estate market still possesses significant growth potential.

 

While the sharp post-COVID surge in prices is unlikely to continue, the market is shifting towards a phase of sustainable growth. Prices are expected to rise steadily, bolstered by strong buyer demand and ongoing infrastructure upgrades. Government investments in public transport and social infrastructure, particularly in top cities and their surrounding districts, are improving connectivity and are set to unlock new growth opportunities not just in the major urban centers but also in their connecting areas.