Land prices rising fast in India:Home prices climb 59% in 5 years, construction costs up 34%

Home prices in India’s top seven cities rose much faster than construction costs between 2021 and 2025. According to Anarock, construction costs increased 34% during the period, while average home prices rose 59%. Rising land prices were a key factor behind the gap. Construction cost rises to ₹3,604 per sq ft The average construction cost increased from about ₹2,681 per sq ft in 2021 to about ₹3,604 per sq ft in 2025. Premium construction costs rose from about ₹3,861 to ₹5,370 per sq ft during the same period, an increase of 39%. In comparison, the average selling price of homes increased from about ₹5,826 to ₹9,260 per sq ft, a 59% rise. Source: Anarock Research Land prices rise 50-120% in top cities Land prices have increased sharply across the top seven cities. Between 2021 and the first half of 2026, land prices rose by 50-120%. In the National Capital Region (NCR), land prices increased by 70-130%. In Bengaluru, the rise was between 60% and 120%. Land costs are not included in the construction cost figures. The rise in land prices has therefore widened the gap between the cost of building a home and its selling price. Infrastructure and demand also push prices Anarock Group vice-chairman Santosh Kumar said infrastructure development, demand and supply, location premiums and developers’ pricing have contributed to higher home prices. The difference between construction costs and selling prices is therefore not linked to construction expenses alone. Land prices and location-related factors have also played a role. Middle East tensions add to construction costs Construction costs also faced additional pressure from tensions in the Middle East between March and July. Steel prices increased by about 20%. Fuel and site logistics costs rose by 15-20%, putting further pressure on construction expenses.