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India's affordable housing segment is experiencing a sharp decline, with sales of apartments priced below INR 50 lakh dropping by 14% in 2024 to 38,626 units, as per JLL India data. Rising land and construction costs, along with reduced launches, have curtailed the supply of affordable homes. In contrast, the overall housing market recorded an 11% growth in sales, reaching 3,02,867 units, marking a record-high volume. This reflects a clear shift towards premium housing as developers and buyers increasingly focus on higher-priced properties.
India's affordable housing segment continues to face significant challenges, with sales of apartments priced below INR 50 lakh declining by 14% to 38,626 units in 2024. JLL India attributes this drop to reduced launches of affordable housing projects and steadily rising property prices. In stark contrast, the overall residential real estate market witnessed robust growth, achieving record-high sales of 3,02,867 units across seven major cities, an 11% increase from the 2,71,818 units sold the previous year. Advertisement
The seven cities included in the analysis were Mumbai (comprising Mumbai city, its suburbs, Thane, and Navi Mumbai), Delhi-NCR (including Delhi, Gurugram, Noida, Greater Noida, Ghaziabad, Faridabad, and Sohna), Bengaluru, Pune, Chennai, Hyderabad, and Kolkata. While sales in premium and mid-segment housing surged, the affordable housing sector lagged significantly.
Rising costs have severely impacted this segment. Land prices in prominent urban areas have skyrocketed, with rates increasing by 150-300% over the past four years. For instance, areas like Dwarka Expressway in Delhi-NCR and prime Bengaluru locations such as Thanisandra, Hennur, and Whitefield have seen exponential growth in land rates. Approval delays and mounting construction costs, including a 25% rise in labour expenses during 2024, have further escalated prices.
Sales of affordable homes accounted for just 18% of total sales in 2024, down from 38% in 2019, according to Anarock Property Consultants. Developers are shifting focus to premium housing due to higher margins, typically 20-30% compared to the 10-15% achievable in affordable projects.
Signature Global and Prestige Estates have already scaled back their investments in this segment, citing unsustainable costs. Tata Realty & Infrastructure emphasised that taxes and the complex approval process further deter developers. Limited government incentives and outdated pricing definitions-such as INR 45 lakh as the affordability threshold-add to the sector's woes, particularly in high-cost cities like Mumbai, where even peripheral areas often exceed this cap.
JLL India's data underscores the shifting landscape, where increased demand for premium housing has outpaced affordable homes. Developers prefer larger ticket sizes that promise better returns, leaving mid-income buyers with limited options. Policy measures like increased tax incentives, the reintroduction of the Credit Linked Subsidy Scheme (CLSS), and 100% tax exemptions under Section 80-IBA could rejuvenate the sector, but these are yet to materialise.
Even as the broader housing market thrives, affordable housing remains on a downward trajectory, with systemic issues such as surging costs, limited incentives, and declining developer interest deepening the crisis. Without structural reforms, mid-income families' aspirations of owning affordable homes will remain unattainable.
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