India's residential real estate sector is experiencing a significant uplift as it enters the crucial festive season, marked by a robust increase in both housing demand and new project launches. However, this positive momentum faces a new challenge from the Reserve Bank of India's (RBI) recent decision to increase the policy repo rate.
Demand and Supply Soar Ahead of Festive Season
According to a Q3 2026 report, new residential launches across six major metropolitan areas surged by 32% year-on-year, reaching 69,718 units compared to 52,842 units in Q3 2025. This increase in supply was strategically timed by developers to capitalize on the traditionally strong October-December festive period, when homebuyer interest peaks.
Housing demand also demonstrated strong growth, rising by 7% year-on-year in Q3, up from just 3% in the previous quarter. This marks the strongest performance for demand recorded during the year, driven in part by historically lower home-loan rates and favorable income-tax slab adjustments that enhanced buyers' purchasing power.
Regional Highlights in New Launches
- Mumbai Metropolitan Region (MMR): Recorded the highest number of new launches with 20,762 units, a 198% increase year-on-year. This surge is largely attributed to a weaker base in Q3 2025 and projects being registered ahead of the festive rush, bringing figures back to Q3 2024 levels.
- Pune: Experienced a massive 643% year-on-year jump in new projects, from 2,180 units in Q3 2025 to 16,192 units across 237 projects in Q3 2026, reflecting strong developer confidence in the market.
RBI Rate Hike Introduces New Uncertainty
On October 7, the RBI increased the repo rate by 25 basis points, moving it from 5.25% to 5.50%. This marks the central bank's first rate hike in nearly four years and signals a shift in its policy stance to “calibrated tightening.”
This move comes after a period where the housing market benefited from stable or lower home-loan rates. The increase in the policy rate could lead to higher borrowing costs for prospective homebuyers as commercial banks transmit these changes to floating home-loan rates. The actual impact on buyer affordability during the festive season will depend on the extent of this transmission by individual lenders.
Property Prices Continue Upward Trend
Despite emerging affordability concerns, residential property prices continued to climb across all six tracked cities during Q3 2026. Bengaluru led this trend with a 14.5% price growth, pushing average prices to ₹11,293 per sq ft.
Other significant price increases were observed in:
- MMR: 8.9% growth, with average prices reaching ₹15,672 per sq ft.
- Pune: 7.7% growth, averaging ₹8,622 per sq ft.
- Chennai: 10.2% growth, with average prices at ₹10,841 per sq ft.
The National Capital Region (NCR) presented a mixed picture. While demand in Noida and Gurgaon saw declines of 9% and 8% respectively, prices in NCR still rose by 10.6% year-on-year to ₹12,311 per sq ft. This rising cost is reportedly pushing developers and buyers towards more affordable markets like Ghaziabad and Faridabad.
Outlook for the Festive Quarter
The upcoming festive quarter is poised to be a critical test for India's housing market. While Pune and MMR are expected to remain hotspots for new supply, Bengaluru may continue to face supply constraints. The NCR market is anticipated to be more selective, with affordability remaining a key determinant for demand.
The combination of strong festive demand, a surge in new launches, and the RBI's recent rate hike means that financing costs and overall affordability will be decisive factors shaping buyer behavior in the months ahead.