While the luxury segment flourishes, the middle class is increasingly being India’s real estate market is experiencing a marked divide, as luxury housing continues to thrive while the affordable segment grapples with challenges. A recent report by Knight Frank paints a telling picture: luxury homes, priced at Rs 1 crore and above, now account for nearly 46% of total home sales across the top eight cities. In contrast, the affordable housing segment—comprising homes priced under Rs 50 lakh—has seen a significant decline, with sales dropping by 14% year-on-year in the third quarter of this year.
This decline is part of a broader trend where affordable housing now comprises just 15% of the total market share—down from 27% in the first quarter of 2022. This is the lowest share the affordable housing sector has seen in years, signalling a growing affordability crisis. Factors such as rising interest rates, escalating construction costs, and limited supply of affordable units are pushing homeownership further out of reach for India’s middle class. Meanwhile, the luxury housing market has seen explosive growth, driven by rising incomes, changing consumer preferences, and a growing appetite for high-end living. The segment has tripled its market share in the last five years, with areas like Delhi NCR, Mumbai, Goa, and Bangalore witnessing a surge in ultra-luxury home sales. A new trend, fractional ownership, is also enabling a wider pool of investors to access these high-end properties.
squeezed out of the housing market. The demand for affordable homes continues to outstrip supply, particularly in prime urban areas, leading to a situation where the affordability gap is widening. As more non-resident Indians (NRIs) invest in high-end properties, luxury homes now account for nearly 25% of all residential sales in the country, up significantly from pre-pandemic levels. This economic shift raises important questions about the future of affordable housing in India. Will it be able to adapt to these changing dynamics, or will it be overshadowed by the demand for premium, luxury living spaces? The decline of affordable housing is a growing concern, and with it, the hope of homeownership for many middle-class Indians seems increasingly remote. The focus on luxury housing could have broader implications, including challenges to long-term sustainability. If these trends continue, the availability of affordable homes in key urban centres may become even more limited, exacerbating the housing inequality that has become a major issue in India’s rapidly urbanising cities.
