Housing Prices in India’s Top Cities Rise Faster Than Construction Costs
India: Housing prices across India’s seven major cities increased by 59% between 2021 and 2025, compared with a 34% rise in construction costs, according to a report by ANAROCK. The average cost of constructing a standard-plus residential project increased from INR 2,681 per sq ft (USD 28.14) in 2021 to INR 3,604 per sq ft (USD 37.83) in 2025, representing a compound annual growth rate of 6.9%. During the same period, average residential capital values rose from INR 5,826 per sq ft (USD 61.16) to INR 9,260 per sq ft (USD 97.22), equivalent to a 12% CAGR.
The report attributed 66% of the increase in residential values to construction-related expenses, while the remaining 34% was linked to land costs, developer margins and changes in demand and supply. It also said land values in the seven cities increased by between 50% and 120% between 2021 and the first half of 2026, excluding some outliers. Santhosh Kumar, Vice Chairman, ANAROCK, said: “Land prices in the major cities have risen sharply in the last five years. Factors like infrastructure-led appreciation, demand-supply dynamics, location premiums and developer pricing have all contributed to the increase in residential capital values." Kumar added: “The Middle East tensions have caused steel, fuel-linked logistics, imported finishing materials and MEP costs to rise sharply, adding another estimated 8-10% to overall construction costs. Developers are now challenged to pass this on to homebuyers without affecting affordability and sales momentum,” Kumar said.
Source: Hindustan Times
