Chennai is leading a massive southern surge while the traditional heavyweights of Mumbai and Pune face a cooling period. The gap between regions reached a record high in 2025 as buyer behavior turned more selective across the country. According to the PropTiger Real Insight report (Jan-Dec 2025), “India’s residential markets in calendar year 2025 reflected a phase of measured normalisation following the elevated post- pandemic momentum of 2024.”
Chennai leads the pack with a 55% surge in full-year sales
Chennai recorded a massive increase in demand, selling 24,892 units in 2025 compared to 16,044 units in 2024. This growth indicates a market that is fundamentally different from the cooling trends seen in North and West India. The city remained stable through the mid-year period before accelerating toward a record-breaking Q3, the report noted.
The southern city stayed structurally sound throughout the year as buyers focused on end-user demand rather than temporary gains. Even with a small moderation in the final quarter, volumes remained higher than at the start of the year. This resilience suggests that the local market is less prone to the shocks currently affecting the Mumbai region.
Developer discipline played a major role in keeping inventory in check while the city prepared for the upcoming state elections. Supply remained calibrated to match the absorption speed, ensuring that prices did not spiral out of control. As per the PropTiger Real Insight report (Jan-Dec 2025), “Chennai delivered one of the strongest performances among all major cities… representing a 55% YoY increase.”
What drove the demand in Chennai?
Explaining the rise of the housing market in the peninsular region of India, the firm said that Southern cities benefited because their demand base was more stable and less exposed to large-ticket hesitation. Western cities, on the other hand, faced sharper pullbacks due to higher prices and longer decision cycles. The report notes that “market performance is increasingly driven by regional fundamentals,” rather than national momentum.
It further added that Southern cities like Chennai and Hyderabad stayed stable due to deep end-user participation and robust absorption.
Mumbai, Pune struggle as western markets face as much as 26% drop
Mumbai MMR saw a significant correction in early 2025, with sales dropping 26.4% compared to the high base of 2024. This trend continued into the middle of the year as the city hit an annual trough of 23,334 units in Q3. Cautious behavior among home seekers resulted in a partial recovery that lacked the strength of previous cycles, the report added.
Pune shared a similar fate, experiencing sharp quarterly fluctuations that made it one of the most volatile zones in the top eight cities. Sales in Pune fell 28.5% year-over-year by the end of 2025, signaling that affordability pressures are finally starting to weigh on buyers, the report noted.
This downward movement contrasts sharply with the southern strength seen in the same period.
The overall western region faced strong headwinds, dragging down the national average during this transition phase, as per the report.
Supply remained elevated in these areas despite the slowing sales, putting pressure on the equilibrium between new launches and unit absorption. The PropTiger Real Insight report (Jan-Dec 2025) states, “Western markets faced headwinds in 2025, with overall sales declining approximately 24%, led by significant corrections in Mumbai (26.4%) and Pune (27.1%),” as quoted in the report.
Interest rates and GST cuts offer a new buying window for 2026
The RBI reduced the repo rate to 5.25% in December 2025, which eased home loan rates toward the end of the year. This move provides a strategic chance for buyers to finalize purchases before prices rise further in the next calendar year. Steady monetary conditions helped keep the market from contracting too sharply during the second half, the report noted.
Input costs for developers are also set to drop after the GST Council reduced taxes on cement from 28% to 18%. While the full benefits might take time to reach the end-user, it creates a buffer against price spikes in the mid-income housing segment. These policy changes are aimed at keeping home ownership within reach for a larger section of society, as per the report.
A stable macroeconomic environment acted as a base for this phase of price-led growth across India. Even with global uncertainty, domestic drivers like urban employment and infrastructure spending stayed intact throughout the year. The PropTiger Real Insight report noted, “With the RBI reducing the repo rate to 5.25% in December 2025, home loan rates eased marginally after remaining broadly stable for most of the year,” as quoted in the report.