Bengaluru's housing divide: Luxury homes soar as budget flats face 5-year backlog

Bengaluru

• Bengaluru's premium home demand rises; budget home sales drop significantly.
• Unsold housing inventory rose 25%, mainly in lower-priced segments
• Developers prioritize larger, amenity-rich properties to satisfy buyers.

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Bengaluru’s residential real estate market has fractured into two distinct realities, with a surging demand for premium properties starkly contrasted by a steep decline in the absorption of budget homes, according to a recent analysis.

Data cited by the Deccan Herald reveals that the city’s unsold housing inventory swelled by 25% over the previous year to reach 67,518 units by the end of 2025. This pile-up is primarily concentrated in the lower-priced segments, highlighting a dramatic shift in buyer preferences that is reshaping developer strategies.

The most acute stress is in the market’s most affordable tier. Properties priced below Rs 50 lakh now face a quarters-to-sale (QTS) ratio of 20.3, a metric indicating it would take over five years to clear existing stock at current sales rates. This dismal absorption rate compares to a city-wide average QTS of 4.9 quarters, underscoring a profound disconnect.

Conversely, the premium segment, particularly homes priced between Rs 1 crore and Rs 5 crore, is experiencing robust health. In this category, the QTS sits at a brisk 2.9 to 3.1 quarters, signalling strong sales velocity. This divergence points to a market where developers are consciously choosing to assume inventory risk at the higher end, confident in its faster turnover.

Industry experts attribute the stagnation in the affordable segment to a fundamental misalignment with contemporary buyer expectations. Vivek Rathi, National Director of Research at Knight Frank India, cited by the Deccan Herald as saying that older, budget inventory often lacks the amenities and locations now in demand. He explained that post-pandemic preferences have solidified, with buyers prioritising proximity to workplaces and modern facilities, even at a higher cost.

This sentiment was echoed by Murali M, Chairman and Managing Director (CMD) of Shriram Properties. He reportedly outlined the new aspirational benchmark, stating that buyers are now seeking larger configurations - typically 1,600 to 2,000 square feet for a three-bedroom home - and are strongly favouring projects by organised, branded developers over merely affordable options.

The strategic response from developers has been a tangible pivot in supply. Knight Frank reports a 7% year-on-year increase in the average unit size of homes launched in Bengaluru during 2025. This recalibration towards larger, amenity-rich properties in desirable locations is a direct attempt to cater to what Murali described as a customer base that is shunning smaller flats plagued by poor accessibility and a lack of modern features.

The broader sales figures for 2025, which stood at 55,373 units across all categories, mask this deepening stratification. The market’s former backbone, the sub-Rs 1 crore segment, is rapidly losing ground.

The current dynamics suggest Bengaluru’s real estate landscape is undergoing a permanent transformation, moving away from its volume-driven past and towards a premium-focused future, leaving a growing inventory of budget homes as a testament to a bygone era of demand.