India's housing market is currently experiencing a notable shift, characterized by a surge in demand for premium residences alongside increasing policy focus on affordable housing solutions. This transformation reflects evolving economic conditions, changing consumer preferences, and strategic government interventions aimed at fostering inclusive growth.
The demand for premium housing, defined as properties priced above ₹1 crore, has seen a significant increase in recent years. Data indicates that these high-value homes now constitute nearly half of all sales in top cities. This surge is attributed to rising incomes, a buoyant stock market, and the availability of attractive home loan rates, empowering buyers to seek larger properties with enhanced amenities in prime locations. Specifically, homes priced between ₹90 lakh and ₹1.5 crore have become the most sought-after category, attracting 36% of demand. This marks a sharp contrast from pre-COVID times, when this segment accounted for only 18% of demand. Mumbai, in particular, has witnessed substantial capital appreciation, with property values increasing by around 28% between 2019 and the first half of 2025, and a peak growth rate exceeding 10% in 2023. Pune has also experienced solid gains, with appreciation of around 20%.
Conversely, the affordable housing segment, typically defined as homes priced below ₹50 lakh, has faced challenges. There has been a decline in both sales and new launches in this category. In Maharashtra, the share of affordable housing in total launches decreased from approximately 15% to just 12% between 2022 and the first half of 2025. Several factors contribute to this decline, including rising construction costs, limited availability of land in prime locations, and a preference among developers to focus on more profitable premium projects. A recent survey also highlighted that a significant percentage of potential buyers in the affordable housing segment are dissatisfied with the available options, citing concerns such as poor location, inferior construction quality, and small unit sizes.
In response to these market dynamics, policymakers are increasingly focusing on initiatives to boost the supply and demand for affordable housing. The Maharashtra government, for example, has unveiled an ambitious plan to invest ₹70,000 crore in creating 3.5 million affordable homes by 2030 under the "My House, My Right" initiative. This initiative aims to address the supply-affordability gap by providing homes for economically weaker sections and low-income groups. The plan emphasizes inclusivity, sustainability, and reliability, leveraging AI-powered transparency through the State Housing Information Portal (SHIP) and integrating with government platforms like MahaRERA and PM Gati Shakti.
The Reserve Bank of India (RBI) has also played a role by cutting policy rates to ease borrowing costs and improve liquidity in the economy. While these measures are expected to spur capital expenditure and support first-time homebuyers, their impact on the affordable housing sector has been limited thus far. Despite these efforts, affordability remains a significant challenge, with a large percentage of potential buyers delaying purchase decisions due to rising housing costs.
The Indian housing market is therefore at a critical juncture, with a clear divergence between the premium and affordable segments. While demand for luxury homes continues to rise, strategic policy interventions are crucial to ensure that affordable housing options are available to a wider segment of the population. These interventions must address issues such as land availability, construction costs, and access to financing, while also focusing on improving the quality and location of affordable housing projects. By creating diverse housing options across price points and locations, cities can ensure that continued growth benefits workers across all income levels, fostering balanced urban development and preserving opportunities for middle-class homeownership.
