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India's affordable housing supply has collapsed to a fraction of its former share, according to the Economic Survey 2025-26, raising concerns about housing accessibility for low- and middle-income families in major cities. Homes priced below INR 50 lakh accounted for just 17 per cent of new launches in 2025, down sharply from 52.4 per cent in 2018, the survey found, highlighting a structural contraction in budget-friendly residential supply in top urban markets. Analysts attribute the decline to rising land and construction costs, developers focus on premium segments with higher margins, and restrictive regulatory norms that discourage affordable projects. The squeeze in supply comes at a time of persistent demand for affordable housing, with policymakers and industry voices warning that the shortfall could widen further without targeted fiscal and regulatory interventions to revive the segment.
The Economic Survey 2025-26 has sounded an alarm over the shrinking footprint of affordable housing in India's major urban centres, revealing that the share of new affordable homes has plunged to just 17 per cent of total new launches in 2025. This figure, which refers to homes priced under INR 50 lakh in top cities, marks a significant contraction from the more inclusive market seen in previous years. In 2018, more than half of new housing supply in these markets comprised affordable units, but by 2025 this share had dwindled to barely a sixth, indicating a structural shift away from budget-friendly residential development. Advertisement
The survey's findings reflect growing challenges in meeting housing needs for low- and middle-income groups within India's urban framework. The dramatic decline in affordable housing supply has coincided with prolonged cost inflation in land acquisition, construction inputs and approvals, which has increasingly pushed developers toward higher-margin mid- and premium-segment projects. Such market dynamics have exacerbated cost-benefit constraints for builders contemplating affordable projects, especially in top metropolitan and Tier-1 cities.
A broader analysis by industry sources suggests that the reduction in affordable stock is not merely cyclical but structural, driven by persistent shifts in development economics and urban land markets. Major research firms have linked the shrinking share of affordable housing to a rising emphasis on luxury and premium launches, even as demand for reasonably priced homes remains robust among the vast majority of homebuyers. Without policy intervention, the affordable housing shortfall could translate into a widening deficit of millions of units in the next decade, complicating efforts to ensure inclusive urban growth and equitable access to housing.
The slowdown in affordable supply also coincides with broader affordability pressures, including rising home prices in key cities and stretched household budgets. Industry voices have called on fiscal and regulatory authorities to consider targeted incentives, revisions to affordability criteria, and enhanced support mechanisms to reinvigorate supply and make ownership accessible for a larger segment of the population. As the nation prepares for future housing policy frameworks, balancing market incentives with inclusive development goals is likely to remain a central challenge.
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