India’s urban housing market is undergoing a structural shift, where strong demand is increasingly colliding with limited affordability. Across major cities, homebuyers are finding it harder to access properties within their budgets, even as supply continues to expand. This disconnect is being driven by rising costs, evolving developer strategies and changing buyer behaviour, creating a widening gap between what is being built and what buyers can realistically afford.
According to a NoBroker report, affordability pressures are visible across major urban markets. Nearly 42 per cent of homebuyers in Bengaluru, 39 per cent in Mumbai and as high as 84 per cent in Hyderabad are priced out of the sub-Rs 1 crore segment. The trend extends to NCR as well, with 64 per cent of buyers in Gurgaon and 41 per cent in Noida unable to access homes within this price range.
Amrita Gupta, Director, Manglam Group, said the issue reflects a structural imbalance rather than a short-term market cycle. “The affordability pressure is driven by rising land costs, input prices and compliance requirements, which have pushed supply towards higher ticket sizes,” Gupta said.
The widening gap, she added, is largely because costs across the value chain have moved faster than income growth, making it increasingly difficult for buyers to enter the market despite sustained demand, particularly for first-time and mid-income homebuyers.
Where Has Supply Shifted?
The report noted that the supply landscape has shifted decisively towards premium housing. In Bengaluru, luxury homes account for 35 per cent of new launches, while affordable housing has declined to just 7 per cent of supply. The share of homes priced below Rs 1 crore has also reduced across metros, highlighting a broader move away from mass housing segments.
The trend, according to Saurabh Garg, Co-founder and Chief Business Officer, NoBroker, reflects changing developer priorities. “The shift clearly reveals that profitability is being prioritised over mass housing needs. Rising land costs make entry-level projects unviable and handling higher value sales is considered more comfortable than handling higher volumes,” Garg said.
In his view, in the absence of strong incentives for affordable housing, developers continue to prioritise higher-margin segments, steadily widening the gap between actual buyer demand and the housing supplied in the market.
Is The Resale Market Rising?
The resale market has emerged as a strong alternative for buyers as new launches become less accessible. The report highlights that Investors who entered between 2020 and 2023 are now witnessing price appreciation of 60–80 per cent, leading to increased resale supply across cities.
This shift, as explained by Kirthi Chilukuri, Founder and Managing Director, Stonecraft Group, reflects both investor confidence and evolving market dynamics. “Rising resale prices and increased investor participation signal strong value appreciation, though it can create competitive conditions for first-time buyers,” Chilukuri said.
From his perspective, expanding financing options and a gradual increase in housing supply are expected to improve accessibility over time, even as resale activity continues to offer buyers a practical route in a high-price environment.
Are Homes Getting Smaller?
According to the report, average home sizes have reduced across cities, with Bengaluru witnessing an 8 per cent drop, followed by Pune and Chennai at around 5 per cent and other metros showing similar trends.
Highlighting the shift in buyer priorities, Garg noted that value is increasingly being assessed differently. “Recent trends show that buyers evaluate value on layout efficiency, variety of amenities, greenery density and long-term livability rather than judging solely by the size of the flat,” he said.
Calling it a response to affordability pressures, Gupta pointed out that what is often termed as ‘shrinkflation’ is not necessarily a compromise. “Developers are focusing on optimising layouts and improving space efficiency to keep overall ticket sizes within reach, while ensuring that livability and design efficiency are not compromised,” she said.
Can The Affordability Gap Be Fixed?
The report noted that the demand-supply gap is structural, driven by rising costs and shifting supply, and is likely to persist as housing moves towards higher-value segments.
The issue, as highlighted by Chilukuri, reflects broader market dynamics. “India’s housing affordability challenge reflects evolving market dynamics, including rising land and construction costs, urbanisation and changing buyer preferences,” he said, adding that continued innovation in construction and financing, along with infrastructure improvements, could gradually improve accessibility.
Addressing the issue, Garg said resolving the gap will require coordinated action across stakeholders. “The crisis isn’t caused by a single factor—it involves developers, policymakers, urban planning gaps and income stagnation among buyers,” he said, highlighting the need for alignment between demand, policy and development.
Cost pressures, Gupta said, remain central to the issue. “The mismatch is largely structural, driven by rising land costs, input prices and compliance requirements, which continue to push supply towards higher ticket sizes,” she said. |
