Affordable housing demand weakens sharply in 2025; sales down by 17 percent

Affordable housing demand weakens sharply in 2025; sales down by 17 percent

• 2025: Affordable home sales down 17%, launches dropped 28%
• Premium home sales rose 14 percent, showing market shift
• Delhi-NCR saw a 25 percent drop in affordable housing sales

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India’s housing market saw a sharp erosion in the affordable segment in 2025, even as premium home sales strengthened, according to a report by Knight Frank India.

Data from the consultancy’s ‘India Real Estate: Office and Residential Market H2 2025’ report shows that sales of homes priced below Rs 50 lakh fell 17 percent year-on-year in 2025, while new launches in the segment dropped a steeper 28 percent. In contrast, sales of homes priced above Rs 1 crore rose 14 percent.

Homes priced between Rs 50 lakh and Rs 1 crore saw an 8 percent YoY decline in sales, shrinking the combined share of affordable and mid-income housing in total transactions.

The report, which was released on February 16, said that the trend was particularly pronounced in Delhi-NCR, where overall residential sales declined 9 percent YoY. Sales in the affordable housing category in the region dropped 25 percent, underscoring weak demand for entry-level homes.

Shishir Baijal, International Partner & Chairman and Managing Director, Knight Frank India, said the divergence reflects a structural realignment in the housing cycle.

“The affordable housing segment faces pronounced pressures, with demand declining 17 percent YoY and supply contracting more sharply by 28 percent YoY. This divergence signals a structural shift in the market, as capital allocation and buyer preference increasingly gravitate toward higher-value homes,” he said.

Baijal added that the slowdown in affordable housing launches highlights developers’ reluctance to deploy capital in the segment, as they increasingly focus on premium housing projects that offer better margins and faster sales velocity.

Dip in supply

On the supply side, the affordable housing segment faced a significant crunch in 2025 as developers moved away from lower-ticket projects. New launches of homes priced under Rs 50 lakh fell 28 percent YoY, while launches in the Rs 50 lakh–Rs 1 crore category declined 9 percent.

As a result, unsold inventory in the sub Rs 50 lakh segment contracted by 7 percent.

The findings indicate that while India’s housing market remains buoyant at the top end, the affordable housing segment is losing share amid rising costs, constrained supply, and shifting developer and buyer preferences.