Affordable housing is vanishing from India's cities

27-Jun-2025

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Across India’s top cities, the supply of affordable and mid-income homes has dropped sharply. According to data from real estate analytics firm PropEquity, inventory in this segment fell from around 3.1 lakh units in 2022 to under 2 lakh in 2024. That’s a 36% drop in just two years. 

In 2024 alone, the number of such homes dropped by 30% compared to 2023.

Some of the steepest declines have come in already unaffordable markets. Hyderabad has lost nearly 70% of its affordable housing supply. 

In Mumbai, the drop is 60%. In Delhi-NCR, supply has halved. The numbers are particularly stark in NCR, which added only 2,672 homes under Rs 1 crore in 2024 — just 6% of the city’s total new supply.

Developers are moving up market, focusing on premium launches, where margins are higher and buyers are less sensitive to price. Houses priced above Rs 1 crore have surged by nearly 48% in the same period. In Bengaluru and NCR, such launches have nearly doubled.

Rising costs are behind this shift. Land has become more expensive. Construction inputs, from steel to cement, remain elevated. Delays in approvals and expensive borrowing have eroded already-thin margins. For many builders, constructing homes priced between Rs 50 and Rs 90 lakh no longer makes sense.

Across the top nine cities, housing prices have risen by 9% year-on-year in FY25, according to PropEquity. In Kolkata, prices jumped 29%, followed by Thane (17%) and Bengaluru (15%). Pune crossed the Rs 10,000 per sq. ft mark for the first time. Chennai, despite being the most affordable among major metros, saw prices climb to Rs 7,989 per sq. ft. Only Mumbai and Navi Mumbai recorded a slight decline of 3%.

Over a two-year period, prices have risen 18% nationally. In Bengaluru, the increase was 44%. For families in the economically weaker section (EWS), with annual incomes under Rs 3 lakh, these jumps make home loans nearly impossible. In most cases, EMIs now breach lending thresholds set by banks.