02-JULY-2025,02:36PM India’s real estate sector is beginning 2025 on a cautious note, as housing launches recorded a 5% year-on-year decline in the first half of the calendar year (H1 CY25). According to a recent report released by the Confederation of Real Estate Developers’ Associations of India (CREDAI), developers have slowed down new project launches due to rising construction costs, regulatory hurdles, and subdued consumer sentiment.
The moderation in housing launches has raised eyebrows in a sector that had shown strong recovery in 2023 and 2024 following the pandemic-induced slowdown. However, stakeholders remain optimistic that the second half of the year could witness a revival, depending on policy support and inflation control.
Decoding the 5% Decline in Housing Launches
Housing Launches : Increased Input Costs Weigh Heavily on Developers
One of the major reasons behind the 5% dip in housing launches is the persistent increase in input costs. Developers have been grappling with the high prices of construction materials like cement, steel, and labour, which has eroded profit margins and delayed decision-making on new projects.
CREDAI President Boman Irani stated:
“Rising construction costs, compounded by financing challenges and land acquisition complexities, have made developers more cautious about launching new housing projects in H1 CY25.”
Housing Launches : Regulatory Bottlenecks and Approvals Cause Delays
Apart from inflationary pressures, regulatory red tape continues to slow down housing project approvals. Multiple permissions from local authorities are often required before a launch, leading to longer wait times and higher holding costs.
As per the CREDAI report, delays in environmental clearances, RERA registrations, and municipal approvals contributed to nearly 18–25% of the projects being postponed in key metros like Mumbai, Delhi NCR, and Bengaluru.
Housing Launches : Market Sentiment Turns Wary Despite Earlier Boom
Consumers Show Restraint Amid Rising Home Loan Rates
Another significant factor behind the slowdown in housing launches is consumer wariness. With home loan interest rates staying elevated through early 2025, many prospective buyers have deferred their home-buying plans. This has directly affected demand forecasting by real estate developers.
According to Knight Frank India, new home sales also slowed marginally by 3% in Q2 CY25, indicating that both buyers and developers are taking a “wait and watch” approach.
Shift in Demand from Luxury to Affordable Housing
Interestingly, there has been a noticeable shift in demand trends. While luxury and high-end real estate saw a boom in 2024, the first half of 2025 is witnessing renewed interest in affordable housing segments, particularly in tier-2 and tier-3 cities. However, housing launches in these categories remain constrained due to lower margins and high capital investment.
CREDAI recommends a strong push from the government through subsidies, tax incentives, and faster clearances to revive affordable housing activity.
Regional Breakdown of Housing Launches in H1 CY25
Mumbai, NCR Witness Sharpest Declines
In terms of geographies, Mumbai Metropolitan Region (MMR) and Delhi-NCR recorded the steepest drop in new housing launches, with declines of 7% and 8% respectively. The reasons include land scarcity, high registration fees, and prolonged clearance cycles.
On the other hand, cities like Hyderabad and Ahmedabad saw more stable activity, aided by pro-business governance and availability of land at competitive rates.
Tier-2 Cities Show Promise but Need Policy Boost
Tier-2 cities like Lucknow, Indore, Coimbatore, and Jaipur have shown marginal growth in housing launches, reflecting the latent demand in smaller cities. However, developers remain wary of scaling up in these markets due to inadequate infrastructure, slower returns, and weaker regulatory frameworks.
The CREDAI report suggests that a dedicated Tier-2 Real Estate Development Policy could help unlock significant housing potential in these regions.
Industry Voices and Developer Sentiments
Developers Urge Government to Intervene
In response to the data, major developers and housing bodies have urged the government to provide support through fiscal and monetary interventions. Recommendations include:
-
Reduction in GST on construction materials
-
Interest subvention for affordable housing
-
Single-window clearance system for housing projects
“We need a combination of stimulus and simplification. If costs and approval times reduce, developers will regain confidence to invest in new housing launches,” said a senior CREDAI executive.
Real Estate Analysts Predict Cautious Recovery
Market analysts believe the 5% decline in housing launches may be a temporary pause rather than a long-term trend. Many point to the upcoming festive season and possible rate cuts in the second half of 2025 as potential turning points.
Real estate analyst Pankaj Kapoor of Liases Foras stated:
“If inflation softens and financing becomes cheaper, H2 CY25 could see a sharp rebound in housing launches, especially in high-demand micro-markets.”
Policy Recommendations to Revive Housing Launches
Strengthening the PMAY Urban Framework
With the slowdown in housing launches, experts suggest a revitalized push under the Pradhan Mantri Awas Yojana (PMAY-Urban) to boost supply in the economically weaker and low-income segments. Faster disbursement of subsidies and easing compliance norms could encourage developers to return to the affordable housing segment.
Introducing a Real Estate Stabilization Fund
CREDAI has proposed the creation of a Real Estate Stabilization Fund, aimed at helping developers manage working capital gaps, particularly during downturns. Such a fund could help avoid large-scale delays or cancellations of projects, thereby stabilizing the supply of new housing.
Conclusion
The 5% drop in housing launches in H1 CY25 serves as a crucial indicator of the real estate sector’s vulnerability to macroeconomic and policy-related factors. While developers have valid concerns over costs and regulatory delays, the underlying demand for housing in India remains robust.
With coordinated efforts from the government, regulators, and developers, the second half of the year could still see a turnaround in housing launches, particularly if backed by strong policy support and consumer-friendly interest rates.
As India moves toward a future where urbanisation and housing go hand in hand, ensuring stability in real estate development will be key to sustainable growth.
Source : ANI
