What Is the ₹1.5 Crore Shift?
The Indian residential market is experiencing a significant change, where homes priced above ₹1.5 crore are no longer a niche segment but a rapidly growing mainstream category. According to a recent report from CareEdge Ratings, the share of new homes launched
below the ₹1.5 crore mark has seen a dramatic drop. In the first quarter of 2022, these homes accounted for 85% of new supply in India's top seven cities. By the first quarter of 2026, that share had plummeted to just 47%. In stark contrast, homes in the ₹1.5 crore to ₹4 crore bracket jumped from 14% to 44% of new launches in the same period, while those above ₹4 crore surged from 1% to 9%. This move isn't just about rising prices pushing older stock into a new bracket; it's a deliberate pivot by developers towards the premium and luxury market, fundamentally altering what's being built and sold.
The Engine: Affluent Buyers and Shifting Aspirations
Several powerful forces are driving this premiumisation. A primary factor is India's growing economy and the corresponding rise in disposable incomes, particularly among High-Net-Worth Individuals (HNIs) and Non-Resident Indians (NRIs). This affluent class of buyers is not just looking for shelter but a lifestyle upgrade, complete with world-class amenities, better security, and wellness infrastructure like gyms and green spaces. Exposure to global living standards has reshaped expectations, with buyers willing to pay a premium for quality, brand assurance, and well-designed homes in prime locations. The post-pandemic world also created a desire for larger homes that could accommodate remote work, further fuelling demand for more spacious, high-end properties.
The Supply Side: Why Developers Are Building Bigger
Developers are not just responding to demand; they are also reacting to economic pressures that make affordable housing less viable. Over the last five years, housing prices have surged almost twice as fast as construction costs, according to a report from ANAROCK. While construction costs for a standard project rose by 34% between 2021 and 2025, average home prices across the top seven cities jumped by 59%. This gap is largely driven by soaring land costs, which have increased by as much as 130% in some areas like the NCR. Faced with high input costs, developers find it more profitable to build for the premium and luxury segments, where margins are healthier and demand from affluent buyers remains resilient, even in the face of inflation.
Which Cities Are Leading the Premium Wave?
While this is a national trend, some cities are at the forefront of the price surge. In the first quarter of 2026, Bengaluru recorded the highest residential price appreciation, with average prices rising by nearly 24% year-on-year, driven by its booming IT sector. Hyderabad has also emerged as a fast-growing hub, with strong infrastructure and IT growth making it attractive. However, the sales trends show a regional divergence. While southern cities like Chennai, Bengaluru, and Hyderabad have shown resilient sales growth, markets in the Mumbai Metropolitan Region (MMR) and Delhi-NCR saw a decline in sales in early 2026. Despite a dip in sales volume, MMR continues to be a major market for premium homes, absorbing a significant share of luxury demand.
What This Means for the Average Homebuyer
The pivot to luxury creates a widening gap in the market, making it tougher for the middle class. With developers focusing on high-ticket projects, the supply of affordable and mid-segment homes is shrinking. Homes priced at ₹40 lakh and below made up just 14% of new launches in 2025, down from 30% in 2020. This squeeze is creating an affordability crisis, where even a 1-BHK in a major metro area can cost upwards of ₹1.5 crore, a price point that is out of reach for many middle-income families. The dream of homeownership is not disappearing, but the entry point is moving higher, forcing many to either postpone their purchase, look for properties in peripheral locations, or stretch their finances further than ever before.
