Residential Prices Surge 59% In Top Indian Cities Since 2021, Outpace Construction Cost Growth By Wide Margin

In India's major cities, residential property prices soared by 59% between 2021 and 2025, significantly exceeding the 34% increase in construction costs over the same timeframe, according to recent Anarock Research data. The escalating disparity between building expenditures and residential property values is attributed to factors such as surging land prices, developer profits, and shifting market dynamics. This development has sparked concerns over homeowners' affordability and put pressure on developers' project margins.

Construction costs surged by 34% during these four years, climbing from Rs 2,681 per square foot in 2021 to Rs 3,604 per square foot in 2025, equating to a compound annual growth rate (CAGR) of approximately 6.9%. Conversely, residential property values rose by 59%, reaching Rs 9,260 per square foot from Rs 5,826 per square foot in 2021, with a CAGR of nearly 12%.

The research indicates that about 66% of the surge in residential prices can be attributed to construction expenses, while the remaining 34% is driven by external factors such as higher land costs, developer margins, and evolving market dynamics. Santhosh Kumar, Vice Chairman of Anarock Group, explained that land prices in major cities have risen sharply in the past five years due to factors including infrastructure-led appreciation, demand-supply dynamics, location premiums, and developer pricing.

Land values in the top seven cities increased by 50%-120% between 2021 and the first half of 2026, with the National Capital Region (NCR) experiencing a 70%-130% increase and Bengaluru witnessing a 60%-120% rise. Kumar highlighted that higher land acquisition costs complicate both project feasibility and home pricing, particularly in established corridors where infrastructure improvements cause land values to surge steeply even before a project's launch.