The Data Confirms a Major Tilt
Recent market data paints a clear picture of a structural change in the Indian residential sector. According to a report from CareEdge Ratings, homes priced below ₹1.5 crore accounted for a staggering 85% of new launches in the top seven cities in the first
quarter of 2022. By the first quarter of 2026, that share had plummeted to just 47%. This isn't just a minor fluctuation; it's a fundamental reshaping of the market. In contrast, the premium segment is booming. Homes priced between ₹1.5 crore and ₹4 crore saw their share of new launches jump from 14% to 44% in the same period. The ultra-luxury category (above ₹4 crore) also expanded its footprint, rising from a mere 1% to 9% of new supply. This trend indicates that the market's growth is increasingly driven by price and product mix rather than sheer volume of units sold.
Why Is the Affordable Segment Shrinking?
Several factors are driving this decline. A primary cause is the sharp increase in costs for developers. Rising prices for land, essential construction materials like steel and cement, and higher compliance costs have squeezed the profitability of affordable housing projects. Between 2021 and 2025, average housing prices across top cities surged by 59%, far outpacing the 34% rise in construction costs, indicating that factors like land value are playing a huge role. This economic pressure makes it more financially viable for developers to focus on the premium and luxury segments, where buyers are less sensitive to price hikes and margins are healthier. As a result, developers are increasingly launching projects that cater to affluent buyers, both domestic and NRIs.
A Change in Buyer Preferences
The shift isn't just supply-driven; demand patterns are also evolving. There is a growing preference among homebuyers for larger homes with better amenities and a higher quality of life. The post-pandemic mindset has placed a greater emphasis on factors like open spaces, wellness features, and privacy. Affluent buyers, in particular, are looking for more than just a place to live; they are seeking a lifestyle asset. This has fueled sustained demand in the premium and luxury categories, which have shown resilience even as the broader market moderated. While overall housing sales saw a slight dip in early 2026 in some major cities like Pune and the Mumbai Metropolitan Region (MMR), the luxury segment held strong.
The Rise of the Premium Homebuyer
The data shows a clear pivot towards higher-value properties. In the first half of 2026, homes priced above ₹1 crore accounted for 54% of total residential sales, up from 49% a year earlier. This segment has become the market's centre of gravity. The demand is so pronounced that even the ultra-luxury segment, with homes priced between ₹20 crore and ₹50 crore, saw sales more than double in the first half of 2026 compared to the previous year. This move towards premiumisation is not just confined to metros; it's also beginning to appear in Tier-II and Tier-III cities as wealth becomes more geographically distributed across India.
What This Means for the Average Buyer
For the average homebuyer, this market shift presents a significant challenge: affordability. With developers focusing on higher-priced projects and overall property values climbing, the goal of homeownership is becoming more difficult for many, especially first-time buyers. The average selling price of a residential property has jumped significantly, meaning buyers need larger down payments and bigger home loans. This is pushing many to either delay their purchase, opt for smaller homes, or look for properties in peripheral locations farther from city centres. The shrinking supply in the affordable and mid-income brackets means less choice and more competition for the properties that are available, highlighting a growing disconnect between market trends and the needs of a large portion of the population.
