India's Housing Market Shifts: Luxury Booms While Affordable Homes Decline
India's housing market has seen a significant shift with a surge in luxury home sales and a decline in affordable housing. Prices across major cities have risen sharply, driven by various factors including rising land costs and increased demand for premium properties.
Housing MarketReal EstateLuxury HomesAffordable HousingProperty PricesReal Estate NewsAug 14, 2025
The share of affordable homes priced below Rs 40 lakh in housing sales across these cities has dropped from 37 per cent in 2021 to 18 per cent in the first half of 2025. Developers have increasingly shifted their focus towards higher-end segments to achieve better profit margins, which has further skewed the sales mix. Between 2021 and 2024, affordable unit sales rose just 6 per cent — from 87,510 to 93,000 units — even as overall sales nearly doubled.
In stark contrast, sales of luxury units priced above Rs 1.5 crore have surged 450 per cent — from about 21,000 in 2021 to nearly 1.2 lakh in 2025. Their share of overall sales has jumped from 9 per cent to 29 per cent. The expansion of India’s wealthy class has been a key driver, but the shift also reflects changing preferences post-pandemic. Lockdowns and work-from-home policies have increased demand for larger homes with more amenities, naturally pushing buyers towards higher-priced units.
Average prices per square foot have climbed sharply over the past two years. In Delhi-NCR, they jumped 49 per cent to Rs 8,650 in April–June 2025 from Rs 5,800 in October–December 2023. In the Mumbai Metropolitan Region (MMR), which includes Thane and Navi Mumbai, prices rose 25 per cent to Rs 16,600, the highest in the country. Bengaluru and Hyderabad saw increases of around 32 per cent each. Rising urban land costs have been a significant factor, particularly as many buyers seek homes in and around city centres. Some experts also believe that certain pockets of the market may have seen high speculative activity.
As of April–June 2025, unsold residential inventory slipped 3 per cent year-on-year to 5.6 lakh units, with MMR (1.8 lakh), Hyderabad (98,000), and Delhi-NCR (89,000) accounting for the bulk. Inventory has been steadily declining since late 2021, when it stood at about 6.5 lakh units. Affordable housing still makes up a sizable chunk of stock in Delhi-NCR (26 per cent) and Mumbai (30 per cent), but remains scarce in Bengaluru (5 per cent) and Hyderabad (2 per cent). By contrast, luxury dominates in Bengaluru (39 per cent), Delhi-NCR (37 per cent), and Hyderabad (35 per cent).
Hyderabad’s inventory overhang — the time needed to clear existing stock with no new supply — is the highest at 26 months, signaling an oversupply in the market. Delhi-NCR stands at 19 months, MMR at 16, and Bengaluru at 12. This overhang indicates that the market in Hyderabad may need more time to balance supply and demand, which could impact future development strategies.
The shift in the housing market reflects broader economic and social trends in India. As the economy grows and the middle and upper classes expand, the demand for premium housing is expected to continue to rise. However, the decline in affordable housing is a cause for concern, as it may exacerbate housing affordability issues for a significant portion of the population. Policymakers and developers will need to address these challenges to ensure a balanced and sustainable housing market.
Frequently Asked Questions
What is the main trend in India's housing market?
The main trend is a significant increase in luxury home sales and a decline in affordable housing. Luxury units priced above Rs 1.5 crore have surged, while affordable homes priced below Rs 40 lakh have become scarce.
Why are luxury homes becoming more popular?
Luxury homes are becoming more popular due to the expansion of India’s wealthy class and changing preferences post-pandemic. Lockdowns and work-from-home policies have increased demand for larger homes with more amenities.
How have property prices changed in major cities?
Property prices have climbed sharply over the past two years. In Delhi-NCR, they increased by 49 per cent, while in MMR, they rose by 25 per cent. Bengaluru and Hyderabad saw increases of around 32 per cent each.
What is the current state of unsold residential inventory?
As of April–June 2025, unsold residential inventory has slipped 3 per cent year-on-year to 5.6 lakh units. The highest inventory is in MMR (1.8 lakh), Hyderabad (98,000), and Delhi-NCR (89,000).
What are the implications of the housing market shift?
The shift in the housing market reflects broader economic and social trends. While the rise in luxury homes indicates economic growth, the decline in affordable housing is a cause for concern and may exacerbate housing affordability issues for a significant portion of the population.
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