The drop of affordable housing sales is attributed to rising home prices, elevated mortgage rates, and a shortage of supply
Sales of affordable homes priced under ₹50 lakh declined by 9% year-on-year to 21,010 units in the January–March 2025 quarter across eight major Indian cities, according to a report by real estate consultancy Knight Frank India. The drop is attributed to rising home prices, elevated mortgage rates, and a supply shortage in the budget housing segment.
The report, titled India Real Estate: Residential and Office (January–March 2025), also showed that sales of homes in the ₹50 lakh to ₹1 crore price range declined 6%, falling to 26,832 units during the same period.
“While higher ticket-size homes have been the primary drivers of market growth, sales in the ₹50–100 lakh and sub- ₹50 lakh categories dropped by 6% and 9% year-on-year, respectively, as buyer focus remained on premium and luxury offerings,” Knight Frank noted.
The consultancy pointed to high property prices and interest rates as key deterrents for buyers in price-sensitive categories. Additionally, the affordable segment’s lack of fresh supply further impacted sales volumes.
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Premium housing sector fuels growth
In contrast, the premium and luxury housing segments witnessed robust growth. Sales of homes priced between ₹1 crore and ₹2 crore saw a modest 2% increase, reaching 22,330 units. The ₹2 crore to ₹5 crore segment posted a significant 28% rise, with 13,735 units sold during the quarter. Even stronger growth was observed in the ₹5 crore to ₹10 crore range, where sales surged 82% to 3,448 units.
Ultra-luxury homes also performed exceptionally well. Sales in the ₹10 crore to ₹20 crore price band more than doubled to 658 units, while the ₹20 crore to ₹50 crore category saw sales jump more than twofold to 92 units. The super-luxury segment, consisting of homes priced over ₹50 crore, witnessed a multi-fold increase in demand, recording 169 units sold.
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Knight Frank noted that higher profit margins and sustained buyer interest in premium housing encouraged developers to channel most of their new project investments into upscale and luxury developments. This focus has widened the gap between the availability of high-end homes and the persistent shortage in the affordable housing market.
Despite these divergent trends, the overall housing market remained stable. Total residential sales across the eight major cities—Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Chennai, Hyderabad, Pune, Kolkata, and Ahmedabad—rose by 2% year-on-year to 88,274 units in the January–March period.
