The Data: A Tale of Two Markets
The numbers confirm a significant pivot in the Indian real estate landscape. According to a recent report from CareEdge Ratings, the share of homes priced below ₹1.5 crore in new launches across the top seven cities has plummeted. In the first quarter
of 2022, this segment accounted for 85% of new supply. By the first quarter of 2026, that figure had dropped to just 47%. In stark contrast, the premium segment is booming. Homes priced between ₹1.5 crore and ₹4 crore now represent 44% of new launches, a massive jump from 14% in 2022. The ultra-luxury category (above ₹4 crore) has also expanded its share from 1% to 9% in the same period. This trend is consistent across multiple data sources. Knight Frank India reports that homes priced above ₹1 crore accounted for 54% of total sales in the first half of 2026, up from 49% a year earlier. Meanwhile, sales in the affordable category (below ₹50 lakh) have seen a decline.
Why Are Developers Chasing Luxury?
The shift isn't happening because demand for affordable homes has vanished; it’s largely a decision driven by economics. Developers operate on margins, and the profitability of luxury projects is significantly higher. Experts estimate that margins in affordable housing can be as low as 10-12%, whereas premium and luxury projects can yield 25-30% or more. Rising costs for land, construction materials, and regulatory compliance have squeezed the viability of budget-friendly projects. Furthermore, the target audience for luxury homes is often less sensitive to economic headwinds like interest rate hikes and inflation. Strong demand from affluent domestic buyers, non-resident Indians (NRIs), and a growing number of high-net-worth individuals (HNIs) provides a reliable and lucrative market for developers. This has created a powerful incentive for builders to allocate capital and resources towards the premium end of the market.
The Squeeze on the Mid-Range Buyer
For those looking to buy a home for under ₹1.5 crore, this market realignment presents several challenges. The most immediate impact is on supply. With fewer new launches in this segment, buyers face dwindling options and increased competition for available properties. This supply-demand mismatch inevitably puts upward pressure on prices for existing inventory in the mid-range bracket. Another consequence is location. As land prices in prime urban areas rise, new affordable and mid-range projects are increasingly being pushed to the peripheries of cities. This means prospective buyers may have to contend with longer commute times, less developed infrastructure, and fewer nearby amenities. The dream of owning a home in a central, well-connected location is becoming more difficult for those not in the luxury bracket.
Navigating the New Real Estate Reality
So, what can a prospective homebuyer in the sub-₹1.5 crore segment do? The first step is to acknowledge the new market dynamics and adjust expectations accordingly. Waiting for a major price correction might not be a viable strategy, as prices continue to hold firm or rise, particularly in high-demand areas. Buyers should broaden their search criteria. This could mean exploring emerging micro-markets or satellite towns that offer better affordability and are poised for future infrastructure development. The resale market is another avenue worth serious consideration, as it can offer properties in more established locations that are not available in the new-launch market. Financial readiness is more critical than ever. Having pre-approved loans and a clear budget can give buyers an edge in a competitive environment. It is also important to research the developer's track record for quality and delivery, as a well-built home from a reputable builder remains a sound long-term investment, regardless of the market segment.
