Faced with a slowdown in housing sales triggered by rising prices, residential developers are reworking their strategies—shrinking apartment sizes, pushing mid-income projects to city outskirts, and offering “all-inclusive” pricing to bring homes back within buyers’ reach.
Housing sales across the top seven cities fell 14% in 2025 amid higher prices, job losses in the IT sector and geopolitical uncertainty, according to Anarock Research. Average residential prices rose 8% during the year, with the National Capital Region recording double-digit growth, the consultant said.
As affordability weakens, developers are focusing on recalibrating ticket sizes. “Apartment ticket sizes have gone up and designs have become more compact,” said Sarthak Seth, head of sales and marketing at Tata Realty & Infrastructure.
In an upcoming phase of one of its Bengaluru projects, the company has reduced unit sizes by about 50 square feet. “The idea is to ensure homes remain within buyers’ reach,” he said.
Seth added that prices in Tata Realty’s projects have risen about 15% over the past year and could edge higher over the next six months.
Shift in Configurations
A chief executive of a Mumbai-based non-banking financial company, which has invested in residential projects in NCR and Mumbai, said developers are increasingly avoiding four-bedroom apartments except in premium, high-value locations.
“The four-BHK fad has faded as these units have become unaffordable. At the same time, developers are reluctant to do two-BHKs because land prices have risen sharply,” he said.
Instead, developers are favouring three-bedroom homes in multiple configurations, typically ranging from 1,500 to 2,200 sq ft. Two-BHK units, he added, are being avoided in projects where the buyer profile has shifted up the income ladder.
While some developers are cutting sizes, others are proceeding more cautiously. Embassy Group, for instance, is balancing luxury offerings with mass-market projects.
In the Mumbai Metropolitan Region, apart from high-end developments in Juhu, Worli and Alibaug, the group plans to launch three projects in Panvel by the end of the year, targeting mid-income buyers with prices starting at `60 lakh.
“Real estate is a cyclical business and we adjust accordingly,” said Aditya Virwani, managing director, Embassy Developments. “We don’t want to overdo luxury. High-volume, mid-income projects sell across cycles,” he said, adding that the company will shift its focus between suburban and prime-city locations depending on market conditions.
While sales have slowed slightly compared with 2022 and 2023, Virwani said recent launches have seen a healthy response.
Some developers are also using pricing innovation to attract buyers. Runwal Group, for instance, is offering “all-inclusive” pricing at projects such as 7 Mahalaxmi, bundling stamp duty, GST and other charges, along with a 30:70 payment plan.
Others are opting to enhance value through amenities rather than shrinking apartment sizes. Mahindra Lifespace Developers has chosen to add features such as additional swimming pools and recreational facilities.
“We did consider reducing sizes, but buyers spending `3-5 crore or more care more about the overall value than marginal changes in area,” Managing Director and CEO Amit Kumar Sinha said.
Tighter Regulatory Clearances
Sinha added that demand remains steady, but launch timelines have been affected by tighter environmental clearance norms. Earlier, developers could launch projects and secure environmental clearance later; under the revised framework, Rera registration is not granted without prior clearance. “A project planned for November may now get pushed to March,” he said.
According to Prashant Thakur, executive director and head of research at Anarock, job losses in IT and IT-enabled services have dampened demand in markets such as Bengaluru. “The fear of missing out has faded. Buyers want job uncertainty to settle before committing,” he said, adding that developers are responding by calibrating new launches.
Price escalation has also hurt affordability. “Before Covid, a standard three-BHK in Bengaluru cost about `1 crore. Today, it is closer to `2.5 crore,” Thakur said. Investor demand, too, has turned cautious, given limited headroom for further price appreciation.
Amit Bagri, chief executive of Kotak Mahindra Investments, said the slowdown in sales has been matched by a moderation in new launches. “Unlike earlier cycles, there is no significant oversupply. Inventory levels of 14-18 months across most markets are manageable,” he added.