Affordable Home Demand Plummets as Buyers Flock to Premium Segment

Affordable housing sales experienced a sharp decline in the first quarter of 2026, with homes priced below Rs 50 lakh falling by 23% year-on-year to 16,273 units across eight major cities, according to a report by Knight Frank India. The fall is primarily attributed to a reduction in new launches in this segment.

Builders have cited rising input costs, especially land, as a major challenge in developing lower-priced homes. Additionally, since the onset of the Covid-19 pandemic, there has been a noticeable shift in demand towards more expensive properties.

The slowdown was also evident in the Rs 50 lakh to Rs 1 crore segment, where sales dropped by 12% to 23,567 units. However, higher-priced homes performed better. Sales in the Rs 1–2 crore segment increased by 10% to 24,657 units, while the Rs 2–5 crore category saw a 17% rise to 16,075 units.

The Rs 5–10 crore segment experienced a slight dip of 3%, with 3,338 units sold. In the premium categories, homes priced between Rs 10–20 crore saw a 12% increase in sales to 738 units. The Rs 20–50 crore segment recorded a significant 80% jump to 165 units. However, homes priced above Rs 50 crore saw a dramatic 93% decline to just 12 units.

Overall, housing sales across all price segments fell by 4% to 84,827 units during the quarter. The report highlighted that high property prices and uncertainty due to the West Asia conflict have negatively impacted demand. 'Market activity remained skewed toward the higher end even as growth moderated, while volumes continue to slide in ticket sizes below Rs 10 million (1 crore),' Knight Frank noted.

The share of homes priced below Rs 1 crore dropped to 47% of total sales, compared to 54% in the same period last year. Shishir Baijal, International Partner, Chairman & Managing Director of Knight Frank India, commented on the market's current state. 'While this phase can be partly attributed to a natural consolidation after strong growth, the continued rise in prices alongside softening volumes indicates growing pressure on affordability and absorption,' he said.

Global uncertainties have also played a role in dampening buyer interest. New housing supply across the eight cities fell by 2% to 94,855 units in the January–March period. This trend underscores the need for a balanced approach to ensure that the housing market remains accessible to a broader range of buyers.