The Numbers Don't Lie
Recent data reveals a dramatic transformation in India's housing supply. According to a report from CareEdge Ratings, homes priced under ₹1.5 crore constituted a mere 47% of new launches in the top seven cities in the first quarter of 2026. This is a steep
fall from 57% in the same period of 2025 and a staggering drop from 85% in the first quarter of 2022. In contrast, the segment for homes priced between ₹1.5 crore and ₹4 crore has swelled, now accounting for 44% of new launches, up from just 14% four years ago. The ultra-luxury category, with homes above ₹4 crore, has also expanded its share from 1% to 9% in the same timeframe. This isn't a minor fluctuation; it's a structural pivot away from the traditional mid-range and affordable housing segments.
The Developer's Dilemma: Costs vs. Margins
So, why are developers turning away from building more affordable homes? A major factor is economics. The cost of construction materials like steel and cement, along with labour and logistics expenses, has seen a sustained increase. Between 2021 and 2025, the average cost to construct a standard residential project rose by 34%. More significantly, land prices in major cities have surged by 50% to 120% since 2021. Faced with these escalating input costs, developers find it increasingly difficult to build and sell homes in the sub-₹1.5 crore bracket while maintaining viable profit margins. As a result, many have shifted their focus to the premium and luxury segments, where affluent buyers are less sensitive to price hikes, ensuring healthier returns.
The New Homebuyer: Aspirations and Affluence
The change isn't just from the supply side. Demand has also evolved. A growing segment of the population, including high-net-worth individuals, entrepreneurs, and well-paid professionals, is driving demand for premium properties. For these buyers, a home is more than just a roof; it's a lifestyle statement. The post-pandemic era has amplified a desire for larger homes with better amenities, dedicated workspaces, and features that promote wellness and community living. This shift in preference, coupled with rising disposable incomes for a section of society and strong interest from NRIs, has created a robust market for high-end homes, encouraging developers to cater to this aspirational demand.
A Widening Affordability Gap
The consequence of this market realignment is a growing challenge for a large number of potential homebuyers. While the premium segment thrives, the affordable and mid-income segments have softened amid inflationary pressures and elevated property prices. First-time buyers, in particular, face acute pressure as prices accelerate faster than their incomes. This trend risks sidelining a significant portion of the population from the formal housing market, pushing the dream of homeownership further out of reach for many. The shrinking supply of homes under ₹1.5 crore, a category that once formed the backbone of the market, signals a widening affordability gap that could have long-term social and economic implications.
