According to an Anarock data survey, India’s housing costs are driven by land, margins, and market pricing rather than bricks and cement. Over the past five years, the cost of building a home in India’s top seven cities has increased significantly, but the cost of purchasing one has increased almost twice as quickly. The average cost of building a standard-plus residential project increased by 34% between 2021 and 2025, from 2,681 to 3,604 per square foot—a compound annual growth rate of almost 6.9%. From ₹5,826 to ₹9,260 per square foot, average residential capital values increased by 59%, expanding at a rate of about 12% annually.
The truth is that only roughly two-thirds of the increase in housing prices can be attributed to construction costs, which accounts for the 25 percentage point difference. Land, developer margins, and fluctuating demand account for the remainder. According to Santhosh Kumar, Vice-Chairman of Anarock Group, “land prices in the major cities have risen sharply in the last five years.” The rise in residential capital values has been attributed to a number of factors, including developer pricing, location premiums, demand-supply dynamics, and infrastructure-led appreciation.
Although land isn’t included in construction cost estimates like cement, steel, and labour are, it is now mostly responsible for price increases. According to Anarock statistics, land values in the top seven cities increased by 50–120% between 2021 and the first half of 2026 (an 8–15% CAGR), with the biggest increases occurring in Bengaluru (60–120%) and NCR (70–130%). “In established corridors, where infrastructure improvements cause land values to rise steeply even before a project’s launch,” Kumar stated, “higher land acquisition costs complicate both project feasibility and home pricing.”
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