India's homebuyers go small as prices soar - compact homes hit 54% demand

Demand for 1-2 BHKs rises to 54% as affordability pressures mount; Residential prices surge across major markets with Pune (+41.4% YoY) and Mumbai (+29.6% YoY) leading growth

India’s housing market is entering a new phase — one defined by smaller homes and bigger prices. According to Magicbricks’ PropIndex Q3 2025, demand for 1–2 BHK homes surged to 54% of total searches between July and September, even as property prices hit new highs across metros. Pune (+41.4%) and Mumbai (+29.6%) led the rally, while Delhi posted the strongest demand rise at +10.3% quarter-on-quarter, a clear sign that homebuyers are prioritizing affordability and practicality in a high-interest-rate environment.

 

The report found that overall housing demand grew 3.1% quarter-on-quarter (QoQ), even as supply expanded modestly by just 1% QoQ nationwide. On a yearly basis, however, new supply declined 4.5%, indicating that developers are still exercising caution amid rising input costs and delayed project approvals.

 

 

Pune emerged as India’s hottest housing market, recording a 41.4% year-on-year (YoY) jump in average residential prices. Mumbai followed with 29.6% YoY growth, while Greater Noida saw prices soar 27.3% YoY. 

 

Under-construction (UC) projects outperformed ready-to-move (RM) homes in terms of price appreciation. In Pune, UC property prices rose 29.1% QoQ, nearly double the 15.8% QoQ gain for ready homes, suggesting that homebuyers are betting on future growth and infrastructure-linked gains.

 

The Delhi-NCR region stood out this quarter as the country’s most active real estate hub. Delhi recorded the strongest quarterly rise in demand at 10.3%, followed by Noida (+6.3%) and Greater Noida (+3.8%). Analysts attribute this surge to large-scale infrastructure projects such as the Dwarka Expressway, Delhi–Meerut RRTS corridor, and the upcoming Noida International Airport — all of which are boosting buyer sentiment and long-term investment confidence. 

Bengaluru maintained steady growth, with demand rising 5.9% QoQ and prices climbing 3.9% QoQ, reflecting a healthy mix of IT-sector resilience and ongoing infrastructure upgrades like the Peripheral Ring Road.

 

Chennai, however, presented a contrasting picture. The city saw a 5.4% drop in demand QoQ, even as supply expanded 1.9%, pointing to a temporary mismatch between developer launches and buyer preferences.  

"The July–September 2025 quarter reinforced a fundamental market shift toward compact and mid-segment housing. While affordability constraints are shaping buyer behavior, infrastructure-led optimism and evolving consumer aspirations continue to fuel demand across key micro-markets. Developers who align product offerings with affordability and lifestyle needs will define the next phase of sustainable housing growth," said Sudhir Pai, CEO, Magicbricks.

 

The PropIndex Q3 2025 findings reaffirm that India’s residential market is entering a phase of measured growth, shaped by affordability, infrastructure expansion, and evolving buyer

aspirations.

 

As compact homes gain ground and under-construction projects attract premiums, the balance between demand and supply will remain crucial in sustaining momentum. Looking ahead, housing activity is expected to be driven less by speculative trends and more by pragmatic, end-user decisions.