A dramatic shift is reshaping India's real estate landscape, as the dream of affordable homes becomes increasingly elusive for millions. The segment's contribution to total sales has witnessed a steep and concerning decline across the nation's major urban centers.
A Sharp Decline in Affordable Home Launches
Recent market analyses reveal a startling trend. The share of affordable housing in total sales has alarmingly dropped from an all-time high of 38% in 2019 to just about 18-19% across key cities in 2025. This more than 50% reduction in market share within six years signals a major retreat by builders from this crucial segment. The primary driver behind this pullback is the relentless rise in the cost of construction inputs, making budget-friendly projects financially unviable for many developers.
Why Developers Are Stepping Back
Industry experts point to a perfect storm of economic pressures forcing this strategic shift. The cost of essential materials like cement, steel, and labour has soared, squeezing profit margins on affordable projects where pricing is critically sensitive. Furthermore, lengthy approval processes and increased compliance costs add to the financial burden. As a result, real estate firms are now channeling their investments and launches towards the mid-income and luxury segments, where higher price points can better absorb these escalating costs.
This pivot is a direct response to market dynamics. While demand for budget homes remains robust, especially among first-time buyers and lower-income families, the supply is rapidly drying up. Developers are choosing to focus on fewer, higher-margin units rather than high-volume, low-margin affordable projects.
Consequences for the Market and Homebuyers
The consequences of this trend are far-reaching. For aspiring homeowners, the shrinking pipeline of new affordable inventory means fewer options and potentially higher prices for existing stock, pushing the goal of homeownership further out of reach. This gap in supply could also impact government initiatives aimed at providing "Housing for All."
The data, highlighted by industry observers like Mahesh Kulkarni and reported on 04 January 2026, underscores a critical juncture for the sector. The market's movement away from affordable housing raises important questions about sustainable urban development and inclusive growth. Without policy interventions or innovative construction technologies to reduce costs, this segment may continue to contract, altering the social and economic fabric of India's cities.
