Tariff war fallout: CA sounds alarm on Bengaluru, Pune housing slump tied to US recession and IT slowdown

When the US administration under President Donald Trump slapped a steep 26% tariff on Indian imports, the ripple effects weren't just confined to trade metrics. Analysts quickly flagged a bigger threat: a possible US recession. For India, the concern goes beyond macroeconomics — it's about jobs, real estate, and the pulse of its tech-driven cities. With American companies tightening spending, Indian IT firms face slower project cycles and reduced revenues. And when the IT engine stutters, cities like Bengaluru and Pune — built on tech-fuelled growth — start to feel the tremors.

Pointing out the possible impact as fallout from US President Donald Trump’s recent tariff war, a chartered accountant warned that a recession in the US may trigger a domino effect in the real estate sector in IT cities like Bengaluru and Pune.

In a post on X (formerly Twitter), CA Paaras Gangwal wrote, “Bangalore, Pune Real Estate Market is linked with IT Sector. It is HOT because boom in IT Sector in last 3-4 Year. Recession in USA may impact Real Estate market of IT Cities too.”

Bangalore’s real estate prices have surged dramatically in recent years, driven by economic growth, the booming IT sector, and an influx of professionals from across the country. Prime localities like Indiranagar, Koramangala, and Whitefield have seen sharp price hikes due to high demand and limited land availability. However, concerns are mounting that this rapid appreciation might not be sustainable.

The real estate markets in Bengaluru and Pune, traditionally buoyed by robust demand from IT professionals, are experiencing a deceleration amid recent layoffs and hiring slowdowns in the technology sector. In Bengaluru, over 50,000 IT employees were laid off in 2024, leading to a significant downturn in housing demand. This trend is further exacerbated by the rise of artificial intelligence and automation, which have reshaped job dynamics and heightened employment uncertainties.

Similarly, Pune's real estate sector is witnessing tempered demand, with potential homebuyers from the IT industry adopting a cautious approach due to concerns over job security and economic stability. As a result, both cities are observing a slowdown in property transactions, reflecting the broader impact of the IT sector's challenges on their housing markets.

India’s housing market continued to struggle in the first quarter of 2025, with a significant 23% drop in sales and a 34% fall in new housing supply, according to a report by PropEquity, an NSE-listed data analytics firm. The report revealed that housing sales across India’s top 9 cities stood at 1,05,791 units in Q1 2025, a sharp decline from 1,36,702 units during the same period in 2024. While Bengaluru and Delhi-NCR were exceptions to this downward trend, the remaining cities faced a noticeable decline in both sales and supply.

Bengaluru emerged as the top performer, witnessing a 10% increase in housing sales with 18,508 units sold in Q1 2025 compared to 16,768 units in the same period last year. The city accounted for 17% of the total sales in Q1 2025, up from 12% in Q1 2024.

Hyderabad saw the most significant drop in sales, plunging by 47%, followed by Mumbai at 36%, Pune at 33%, Kolkata at 28%, Thane at 27%, and Navi Mumbai at 7%. Chennai saw a smaller decrease of 2%.