In the first quarter of 2026, India's residential real estate market exhibited a notable decline, with sales dropping by 4% year-on-year (Y-o-Y). According to a report by Knight Frank India, residential sales totaled 84,827 units, down from 88,361 units during the same period in 2025. This dip occurred against a backdrop of robust demand fundamentals, indicating a shift in the market dynamics. In stark contrast, the office leasing sector experienced a significant upswing, achieving a quarterly high of 29.9 million square feet, representing a 6% increase Y-o-Y.
Several factors appear to be influencing the moderation in residential sales. Key markets such as Mumbai, the National Capital Region (NCR), and Pune reported declines of 7%, 11%, and 11%, respectively. Shishir Baijal, Chairman and Managing Director of Knight Frank India, attributed this moderation to a natural consolidation phase following a period of substantial growth. He emphasized that while demand drivers remain intact, rising prices and reduced sales volumes are creating affordability pressures. Additionally, external factors such as geopolitical instability and fluctuations in equity markets have contributed to the observed decline in residential demand.
The market's performance is also characterized by shifting consumer preferences, particularly towards higher-priced properties. Sales of units priced above Rs 1 crore increased by 11% Y-o-Y in Q1 2026, while more affordable segments saw significant declines. Specifically, sales in the sub-Rs 50 lakh segment fell by 23%, and those in the Rs 50 lakh-1 crore range decreased by 12%. The Rs 1-2 crore segment demonstrated notable resilience, accounting for 29% of total sales and registering a 10% increase Y-o-Y. Despite the overall sales moderation, property prices continued to rise, with the NCR area experiencing some of the highest increases, notably in Ghaziabad and Greater Noida, where prices surged by 13% and 11%, respectively.
In terms of inventory and supply, the number of quarters required to sell existing stock in the top eight cities increased slightly from 5.9 in Q1 2025 to 6 in Q1 2026. Furthermore, unsold inventory rose by 3% Y-o-Y, totaling 519,844 units. Although new property launches declined by 2% Y-o-Y, they have consistently outpaced sales for 14 consecutive quarters. Conversely, the office leasing sector continues to thrive, with demand for office space surpassing new completions. This trend highlights a divergence in the real estate market, where office leasing is thriving while the residential segment encounters headwinds. As market conditions evolve, stakeholders will need to adapt strategies to navigate these changing dynamics effectively.