Housing prices across India’s top seven cities increased significantly faster than construction costs between 2021 and 2025, according to Anarock Research. Average construction costs for standard-plus residential projects rose 34% from Rs 2,681 per sq ft in 2021 to Rs 3,604 per sq ft in 2025, while average residential capital values increased 59% from Rs 5,826 per sq ft to Rs 9,260 per sq ft.Construction costs recorded a CAGR of about 6.9% during the period, compared with around 12% for residential selling prices. Premium-segment construction costs rose 39% from Rs 3,861 per sq ft to Rs 5,370 per sq ft. Anarock attributed the widening gap partly to rising land acquisition costs, developer margins and changing demand-supply conditions.Land values across the top seven cities increased by around 50-120% between 2021 and H1 2026. NCR and Bengaluru recorded some of the sharpest increases, with land prices rising by about 70-130% and 60-120%, respectively. Infrastructure development and strong demand in established corridors have further supported land price appreciation.Anarock also estimated that Middle East-related disruptions have added around 8-10% to construction costs, with steel and fuel-linked logistics witnessing the sharpest increases. Steel prices rose about 20%, with TMT bars reaching nearly Rs 72,000 per tonne, while fuel and site logistics costs increased 15-20%. Finishing materials became around 8-12% costlier, while mechanical, electrical and plumbing (MEP) expenses increased 9-13%.Labour, which accounts for around 25-30% of project costs, increased by about 5-6%, while cement prices rose approximately 4-5%. Between 2023 and 2025, average core building costs across the top seven cities increased 13% from Rs 1,956 per sq ft to Rs 2,212 per sq ft. MEP costs rose more than 17% from Rs 672 per sq ft to Rs 788 per sq ft and accounted for nearly 22% of total construction costs in 2025.Higher input and land costs are expected to put further pressure on developer margins, particularly for already launched projects where the scope for price revisions is limited. Developers of new projects have greater flexibility to adjust pricing, while affordable and mid-income housing projects may require calibrated price increases, specification optimisation and changes in project mix to maintain buyer affordability.