Limited new supply, rising construction costs and a shift
towards premium housing are reshaping India’s residential property market
India’s affordable housing segment is facing another
challenging phase, with sales of homes priced below ₹50 lakh declining 15%
year-on-year in the first half of 2026. According to Knight Frank data, 32,063
homes in this price category were sold across India’s eight major residential
markets during January–June 2026, compared with 37,796 units in the same period
last year.
The decline comes at a time when demand for reasonably
priced homes remains significant, particularly among first-time buyers and
middle-income households. The bigger issue, however, appears to be the
shrinking availability of new homes within the affordable price bracket.
There are many reasons why it is difficult to build
affordable homes. There are many
reasons, such as skyrocketing land prices in and around major cities, rising construction costs, increasing
regulatory and development costs, and the limited availability of well-located
land that can support homes under Rs 50 lakh. This is because in the top seven
cities in India, the share of new homes priced below Rs 50 lakh has declined
from more than half of new supply in 2018 to 17% by 2025.
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