A Tale of Two Markets
The numbers paint a stark picture of a market that is rapidly moving upmarket. In early 2022, homes priced below Rs 1.5 crore accounted for 85% of new launches in India's top cities. By the first quarter of 2026, that share had plummeted to just 47%.
More granularly, the affordable segment—defined as homes under ₹50 lakh—has seen a near-total collapse. It fell from representing over half of all new property launches in 2018 to just 6% in the second quarter of 2026. In its place, the premium segment has boomed. Homes priced between ₹1.5 crore and ₹3 crore now form the largest share of new supply, while the luxury category (above ₹4 crore) has expanded its slice of the market from 1% to 9% in just a few years. This isn't a slowdown; it's a structural realignment of who gets to buy a new home in urban India.
The Squeeze of Rising Costs
For developers, the math on affordable housing no longer adds up. A primary culprit is the relentless rise in input costs. Since 2021, the prices of essential materials like steel and cement have escalated significantly, driven by global supply chain issues and domestic demand. This has been compounded by rising land prices, which have surged by 40-100% in major metro areas since 2019, and increased labour and compliance expenses. The combined effect has squeezed profit margins on affordable projects, which operate on thin margins to begin with. When construction costs rise by 8-10%, developers find it difficult to pass on the full burden to price-sensitive buyers in the affordable segment without killing demand. Consequently, building fewer, more expensive homes has become a more viable business strategy.
Following the Profitable Buyer
While costs have pushed developers away from the affordable segment, strong demand has pulled them towards luxury. India has seen a significant increase in the number of high-net-worth individuals (HNIs) with substantial disposable income. This affluent class of buyers, along with non-resident Indians (NRIs), has shown resilient demand for high-end properties, viewing them as both a lifestyle upgrade and a stable investment. These buyers are less sensitive to price increases and often seek larger homes with premium amenities—a trend accelerated by the post-pandemic emphasis on wellness, space, and home offices. For developers, this segment is a safe bet, offering healthier profit margins and quicker sales, as evidenced by luxury projects selling out within days of launch.
A Shift in Homebuyer Aspirations
The pandemic permanently altered what many Indians want from a home. The experience of lockdowns and remote work created a powerful demand for more space, better amenities, and a higher quality of life. Buyers who could afford it began prioritising larger 2-BHK and 3-BHK configurations, dedicated home offices, and access to green spaces and wellness facilities. This shift in preference naturally steered a significant portion of the market towards mid-to-high-end properties that could offer these features. While there is still immense underlying demand for affordable homes, the aspirational shift among those with purchasing power has given developers a clear signal. They are building for the buyer who wants not just a roof over their head, but a complete, amenity-rich lifestyle.
