Premium Homes Dominate Indian Real Estate Market, Report Reveals

A Knight Frank India report has revealed a significant shift in India’s residential market, with premium homes priced Rs 1 crore and above now constituting 50% of total annual sales. The report, released in the second half of 2025, underscores the resilience of the overall residential market, supported by a stable macroeconomic backdrop and recent repo rate cuts.

While the overall market remained resilient, with 3,48,207 units sold in 2025, sales of units priced over Rs 1 crore saw a 14% year-on-year (YoY) increase. In contrast, the affordable housing segment, defined as homes priced under Rs 50 lakh, experienced a significant 17% YoY decline in demand and a 28% YoY drop in new launches.

The slowdown in the affordable housing sector is largely confined to lower-ticket segments, leaving a smaller footprint of affordable housing sales across India. This trend is particularly evident in cities like Delhi-NCR, where the market is increasingly dominated by higher-value properties.

Shishir Baijal, International Partner, Chairman, and Managing Director of Knight Frank India, highlighted the pressures faced by the affordable housing segment. He noted that demand has declined by 17% YoY and supply has contracted more sharply by 28% YoY. This divergence signals a structural shift in the market, with capital allocation and buyer preference increasingly gravitating toward higher-value homes.

The marked slowdown in new affordable launches reflects developers' reluctance to commit capital to this segment. Instead, they are focusing on premium housing, which is shaping the current housing cycle. In 2025, the affordable housing sector faced a significant supply crunch, with developers pivoting away from lower-ticket projects. This led to a 28% YoY drop in new launches for units priced under Rs 50 lakh and a 9% decline in the Rs 50 lakh–Rs 1 crore category.

The lack of fresh supply in the affordable housing segment resulted in a 7% contraction of unsold inventory in the sub-Rs 50 lakh segment. This contraction occurred even as the broader market underwent a major structural shift toward premiumisation.

The report by Knight Frank India provides valuable insights into the dynamics of the Indian real estate market, highlighting the growing importance of premium homes and the challenges faced by the affordable housing sector. This information is crucial for policymakers, developers, and investors looking to navigate the evolving landscape of the Indian housing market.