The Data: A Tale of Two Markets
The numbers paint a clear picture of a market tilting decisively towards the high end. According to data from CareEdge Ratings, new homes priced under ₹1.5 crore, which constituted 85% of launches in the top seven cities in early 2022, plummeted to just
47% by the first quarter of 2026. During the same period, the share of homes in the ₹1.5 crore to ₹4 crore bracket surged from 14% to 44%. The shift is even more dramatic at the lower end. Homes priced below ₹75 lakh have nearly vanished from new projects, dropping from 47% of launches in late 2021 to a mere 17% in early 2026. Some reports indicate the affordable segment, defined as homes under ₹50 lakh, has collapsed to just 6% of new launches in mid-2026 from over 52% in 2018. Meanwhile, properties costing more than ₹1 crore now account for over half of all home sales.
Why Developers Are Looking Upmarket
This pivot by developers isn't arbitrary; it's a response to stark economic realities. The primary driver is profitability. Rising input costs have made affordable housing projects financially unviable for many private builders without government subsidies. Land acquisition, a major expense, has seen prices soar by 50% to 120% in major cities between 2021 and 2026. When combined with escalating costs for construction materials and regulatory compliance, the profit margins on lower-priced homes have been severely compressed. In contrast, the premium and luxury segments offer healthier margins and cater to a class of buyers less affected by inflation and interest rate hikes. This has led developers to focus their capital and efforts where the returns are more secure and substantial.
The Evolving Indian Homebuyer
The trend isn't solely supply-driven. Demand has also evolved, particularly after the pandemic. A growing base of affluent, high-income professionals and a K-shaped economic recovery have created a robust market for premium properties. These buyers are not just looking for a roof over their heads; they are seeking a lifestyle upgrade. The rise of hybrid work models has increased the demand for larger homes with dedicated workspaces. Furthermore, today's discerning buyer prioritises developer credibility, professionally managed communities, wellness amenities, and sustainable design. This has fueled demand for integrated townships and branded residences that promise a higher quality of life, security, and even a potential hedge against inflation.
The Middle-Class Squeeze
The most significant consequence of housing premiumisation is the immense pressure it places on middle-income and first-time homebuyers. With the supply of affordable and mid-range homes dwindling, a large segment of the salaried class is being priced out of major urban markets. The dream of owning a home in a prime city location is becoming increasingly difficult, pushing potential buyers to the peripheries or forcing them into the rental market for the long term. A UN-Habitat report highlighted the growing shortage, noting that the supply-to-demand ratio for affordable housing in India's top eight cities fell from 1.05 in 2019 to just 0.36 in 2025. This widening gap means that even as India's economy grows, access to formal housing is becoming more unequal.
