India Ratings and Research expects residential real estate sector to see subdued growth in FY27, following strong growth during FY23-FY25 and slow growth in FY26.
Higher property prices have reduced the affordability factor, which drove growth in the past three years. Demand dynamics in the mid-market has remained challenged, however even the premium segments affordability is turning into a headwind, the rating firm said on Thursday .
“Absorption and prices have largely been supported by growth in the premium and luxury segments, shifting supply preferences to upmarket segments. The high base over FY23-FY25 is likely to dampen growth rates in FY27,” the rating firm said.
IT Headwind
The firm has maintained a neutral outlook for the residential real estate for FY27.
Developer Defiance
However, property developers are unfazed.
“There could be problems in some parts of the country, you cannot generalise if,” said Niranjan Hirananadani, managing director at Hiranandani group.
After four years of high growth , there could be some slackness but there are no challenges in premium segment, Hirnanadani said . “Only affordable segment is having offtake issues,” he said.
Said Sarthak Seth, head Sales & marketing, at Tata Realty & Infrastructure:” AI and Trade wars did cast some setback but we believe H2 will more than make up”.
India Ratings expects YoY sales growth to be up 5%-7% yoy in FY27, largely contributed by value growth. Post-pandemic aggregate housing prices in the top eight metros surged by a CAGR of 9% and remained high at 12% at end-September 2025. Irrespective of macro cyclicality, slower net headcount additions across large Indian information technology (IT) services firms and role consolidation due to artificial intelligence (AI)/automation are reducing near-term upgrade demand in IT-dependent housing markets such as Bengaluru, Pune and Hyderabad, it said.
The sector posted a five-year CAGR for 1HFY26 in the band of 5% to 30% across the top eight cities, with Hyderabad, MMR, and NCR posting plus 20%. Although Chennai, Pune and Kolkata posted less 12% growth, Ind-Ra estimates that price changes are faster than changes in Income levels.
“Interest rates reduction and higher income tax slabs leading to higher savings in the hand of consumers could support mid-market housing demand in FY27, “ it said.