Pune Real Estate Market Faces Reset Due to Rising Prices and Affordability Issues
Pune’s residential real estate is now in a crucial phase of consolidation, as per Gera Developments’ July 2025 bi-annual report. The market is experiencing a 76% rise in average home prices over the last five years, along with stalled affordability efforts, leading to a major recalibration. This change is driven by price increases, larger property sizes, and inventory issues.
Main Drivers of Market Consolidation
- Price Growth and Size Expansion: Residential properties have seen a 25% increase in average sizes over seven years, alongside a 45% rise in house price-to-income ratios (6.52:1) and a 7.31% year-over-year growth.
- Affordability Issues: Budget and upper-mid segments struggle with entry costs for smaller units (1 BHK) declining while luxury property sales (>₹1.5 Cr) stabilize.
- Inventory Challenges: The backlog reached 10.78 months, the highest since 2020, with project launches slowing by 10.3% and absorption rates dropping in several areas.
Market Responses: Shifts by Segment
| Price Tier | Demand Trends | Size Preferences |
|---|---|---|
| <₹1 Cr | Declining (small formats down) | 1 BHK, compact layouts |
| >₹1.5 Cr | Stable/rising (13% increase) | ≥1,200 sq.ft homes |
- Luxury Buyers Value Space: Sales of premium properties dropped by 10%, while homes below 1000 sq ft rose by 13%.
- Developer Tactics: Smaller projects (500 units) increased by 70% as developers use right-sized layouts and sharper value propositions to attract cost-conscious buyers.
Regional Hotspots and Issues
- East Pune Leads: Recorded 9.6% price growth, outperforming other areas due to infrastructure development and investor demand.
- Metro Corridor Impact: Hinjewadi and Job roles become priority zones, with improved connectivity driving demand despite affordability challenges.
Strategic Advice
Developers should:
- Adjust new launches: Focus on micro-markets that respond to demand.
- Use value engineering: Optimize layouts without sacrificing livability.
- Employ data-driven targeting: Identify niche segments like move-up or downsizing buyers.
This recalibration is a crucial time for Pune’s real estate sector, balancing affluent demand with broader market sustainability challenges. As prices stabilize and inventory pressures ease, the market’s ability to adapt to changing buyer priorities will determine its long-term resilience.