Bengaluru's Housing Market Faces Downturn with 8% Sales Drop in June Quarter

Strategic Insights -

Bengaluru's housing market, already experiencing affordability pressures, is likely to face a downturn with the Karnataka government's recent decision to double the property registration fee to 2% of the transaction value. This move has sent shockwaves through the market, with experts warning that it may weaken homebuyers' sentiment and impact the budget of homebuyers. With transaction costs for home purchases having risen sharply, developers are likely to reorient their project financing terms to ensure demand remains intact, but significant inventory is expected to pile up over the next several quarters.

Key Takeaways:

  • Bengaluru's housing market sales dipped around 8% from a year earlier to 15,100 units in the April-June quarter, after a steeper 16% year-on-year fall a quarter earlier to around 15,000 units.
  • Unsold inventory has piled up, rising nearly 30% year-on-year to 58,900 units.
  • The higher costs are already worrying homebuyers, with purchasing a flat worth Rs 1 crore now requiring around Rs 7.5 lakh in stamp duty and registration fees, up from Rs 6.6 lakh.
  • Markets are shifting in favour of premium housing, with Bengaluru recording 34,551 new residential launches in H1 2025, a 19% YoY increase, driven largely by the premium housing segment.
  • The sudden increase in stamp duty will likely hurt consumer sentiment, and developers will likely double down on luxury projects to tap demand, leaving the affordable housing market underserved.
  • Analysts expect registrations to slow in the short term as buyers recalculate budgets and defer decisions.

Statistics:

  • 15,100 units sold in the April-June quarter, a 8% decrease from the same period last year.
  • 58,900 unsold units, a nearly 30% year-over-year increase.
  • 34,551 new residential launches in H1 2025, a 19% year-over-year increase.
  • 20,484 units launched in Q1 2025, a 62% spike.
  • Transaction costs for home purchases rising to Rs 7.5 lakh, up from Rs 6.6 lakh.
  • Rs 50,000-75,000 additional burden on buyers in the Rs 40-70 lakh price range.

Sources:

  • Tejid Times: "Housing sales in City down 8% in June quarter"
  • JLL Real Estate Intelligence Service: Report on Bengaluru's residential market
  • Bhavesh Kothari, founder at Property First: Comments on the impact of stamp duty hike on consumer sentiment