Housing prices across India's top seven cities rose 59% between 2021 and 2025, nearly double the 34% rise in construction costs, with NCR posting the sharpest land price increases nationally.
If you've felt like home prices have been rising faster than it should genuinely cost to build a house, the data now backs that up precisely. Housing prices across India's top seven cities climbed 59% between 2021 and 2025, significantly outpacing the 34% rise in residential construction costs over the same period, according to Anarock Research. That's a 25-percentage-point divergence, and Anarock itself calls it "an urgent affordability crisis for buyers and a severe margin threat for developers."
The average cost of constructing a standard-plus residential project rose from ₹2,681 per sq ft in 2021 to ₹3,604 per sq ft in 2025, a 34% increase, or roughly 6.9% annually. Average residential capital values, meanwhile, jumped from ₹5,826 per sq ft to ₹9,260 per sq ft, a 59% increase, close to 12% annually, nearly double the pace of construction cost growth.
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Here's the detail that explains the gap: land values aren't included in standard construction cost calculations at all, and that's exactly where the real pressure sits. Land prices across the top seven cities rose 50% to 120% between 2021 and H1 2026. NCR posted the steepest increase nationally, 70% to 130%, with Bengaluru close behind at 60% to 120%. Santhosh Kumar, Vice Chairman of Anarock Group, said infrastructure-led appreciation, demand-supply dynamics, and location premiums have all pushed land values up sharply, and that "higher land acquisition costs complicate both project feasibility and home pricing, especially in established corridors, where infrastructure improvements cause land values to rise steeply even before a project's launch."
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On top of land costs, the West Asia conflict has added its own pressure specifically to material and logistics costs. Within an 8-10% conflict-driven increase in construction costs, steel has risen 20%, the sharpest single mover, alongside fuel-linked logistics. MEP costs have climbed 9-13%, finishing materials 8-12%, and cement 4-5%. Labour, the largest single cost component at roughly 25-30% of project costs, has risen a comparatively moderate 5-6%.
Anarock's own breakdown attributes about 66% of the overall price increase to construction expenses, with the remaining 34% driven by land costs, developer margins, and shifting market dynamics. That framing is worth sitting with: even though construction costs make up the majority share of the increase, it's the smaller, land-driven portion that's growing fastest and squeezing both affordability and developer margins simultaneously.
If you're evaluating a purchase in NCR specifically, this data confirms something worth taking seriously: land cost inflation here is running ahead of nearly every other Indian market, which means established, infrastructure-linked corridors are likely to keep seeing price growth outpace construction cost growth for the foreseeable future. If you're a developer, the margin squeeze cuts the other way, land costs eating into feasibility even before ground is broken is exactly the pressure that's been showing up in recent quarters' bookings and launch activity across the sector.
