New Delhi

Housing sales in India are expected to remain soft in the coming months unless developers reduce their focus on the luxury segment and reorient towards mid-income and premium housing, according to a report by Nuvama Institutional Equities.

The report stated that developers need to improve affordability by keeping prices and ticket sizes under control to support demand.

"We argue housing volumes would remain soft until developers, reduce focus on luxury segment and reorient towards mid-income/premium segment and focus on improving affordability by keeping prices/ticket size restricted," the report noted.

It added that realty stocks have corrected after the first half of CY24, in line with falling volumes, despite strong pre-sales. This correction has been driven by a decline in valuation multiples, and the report expects this trend to continue amid concerns over pre-sales growth.

While maintaining a cautious stance on pure-play housing companies, the report highlighted that firms with sizeable annuity portfolios may perform relatively better.

The report also pointed out that housing sales and launches by value grew by 18 per cent and 17 per cent year-on-year, respectively, in February 2026. In volume terms, demand increased by 11 per cent year-on-year, while supply remained flat.

Tech-driven cities such as Bengaluru, Hyderabad and Chennai led housing sales during the month.

On a year-to-date basis, demand by value rose by 9 per cent year-on-year, while supply declined by 6 per cent, indicating a tightening supply scenario despite rising demand.

However, unsold inventory levels have increased to 20 months compared to 19 months in February 2025, reflecting pressure on absorption levels.

The report noted that ticket sizes have continued to rise due to higher prices and larger unit sizes, which has impacted affordability and contributed to declining volumes.

Inventory levels across India have also risen, with Pune, the NCR and Bengaluru reporting inventory levels of 13-16 months each. Other markets have inventory levels ranging between 19-22 months, except Hyderabad, which has the highest inventory at 27 months.

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The report further highlighted that property prices have increased across most cities, with Bengaluru witnessing a sharp rise of 17 per cent year-on-year, while Chennai and the Mumbai Metropolitan Region (MMR) saw price increases of 10-13 per cent.

So the report cautioned that despite corrections in stock prices, concerns over affordability, rising inventory and slowing volume growth may continue to weigh on the housing sector in the near term.