1BHK Launch Decline
In the aftermath of the COVID-19 pandemic, the Mumbai property landscape, which had seen a surge in luxury housing, is now experiencing a significant undercurrent
of change. A property market analyst has observed a notable reversal in the real estate cycle, particularly impacting the availability of smaller apartments. For instance, new launches of 1BHK apartments in Mumbai saw a dramatic decrease of nearly 50 per cent in 2025, plummeting to approximately 9,786 units. This figure starkly contrasts with the preceding years, where the annual average for such launches hovered closer to 20,000 units, according to data meticulously tracked by Mumbai Housing Compass and shared by real estate analyst Vishal Bhargava. This substantial drop indicates a clear shift in development priorities and market offerings, moving away from the compact, budget-friendly segment that historically served a significant portion of the city's population.
Developer Focus Shift
Following the pandemic, developers in Mumbai significantly altered their strategic focus, moving away from the development of 1BHK apartments to concentrate on larger housing configurations such as 2BHK, 3BHK, and even 4BHK units. This pivot was driven by a confluence of factors, including a post-pandemic boom in stock markets and success stories from the startup ecosystem, which fueled a demand for more spacious living environments. Furthermore, larger homes offered developers more attractive profit margins compared to the typically thinner profit margins associated with 1BHK projects. This strategic shift, while financially beneficial for builders, has inadvertently led to a substantial increase in the average price of new apartments in Mumbai, which has climbed to around ₹3 crore. Consequently, compact and affordable housing options have become increasingly inaccessible, particularly in the core areas of the city, impacting a broad spectrum of potential homebuyers.
Buyer Preferences Evolve
Post-COVID, a discernible shift in buyer preferences emerged, with a marked increase in demand for larger, more spacious homes. Developers responded enthusiastically to this trend, effectively sidelining the smaller apartment formats that had traditionally been the cornerstone of middle-class housing. However, as sales momentum begins to slow down and concerns about affordability intensify heading into 2026, there's a growing sentiment that the market may need to realign with prevailing economic realities. Many observers believe that Mumbai has, to some extent, overlooked the needs of its middle-class population. As the market cools, it is anticipated that Mumbai will once again turn its attention to catering to the demands of this demographic, necessitating a reconsideration of development strategies and housing typologies.
Affordability Crisis Deepens
The ground reality in Mumbai reflects a growing concern over housing affordability, especially for those seeking compact homes. Genuine 1BHK options priced below ₹1 crore have become exceedingly rare in the city's central districts, often being relegated to more distant suburbs like Thane, Mira Road, or even further out towards Karjat. Anecdotal evidence suggests that what was once a modest 450 sq ft carpet area for a 1BHK has now been repositioned and marketed as 2BHK units within the same compact footprint. Compounding this issue, even at prices exceeding ₹1 crore, a basic 1BHK often feels cramped, featuring tiny kitchens, poorly designed bathrooms, a lack of proper balconies, and significant parking challenges that force vehicles onto already congested streets. Public sentiment, as expressed on social media, reveals widespread frustration, with many characterizing Mumbai as a "slum for 99 per cent of the citizens" and lamenting the dramatic price increases for even 2BHK units in areas like Bhayandar, now starting at ₹1.3-1.5 crore. The perceived focus on luxury 4BHK units in areas like Borivali, with price tags reaching ₹8-9 crore, further fuels cynicism among the general populace.
Market Correction Ahead?
While some argue that the contemporary middle class aspires to at least a 2BHK or 3BHK, viewing 1BHKs as solely for lower-income groups, the prevailing sentiment indicates that the ability to afford homes has not kept pace with escalating prices. The current market ecosystem appears heavily skewed towards high-end buyers, leading to a crucial question: without genuine purchasing power, does demand truly exist? Concerns have also surfaced regarding a potential builder "cartel" and the impact of government levies on construction costs, but the fundamental issue remains a scarcity of everyday homes. This challenge is not confined to Mumbai; similar observations regarding the lack of smaller, affordable housing inventory are emerging from cities like Pune, Hyderabad, and Bengaluru, where such options are largely limited to government housing schemes. As the market cools, it remains to be seen whether price adjustments will provide relief for the middle class or if builders will continue to prioritize luxury segments, treating compact homes as a secondary consideration.
