Affordable housing demand drops 17% YoY in 2025; new launches fall 28%: Knight Frank

The affordable housing segment in India faced significant pressures in 2025, with demand declining 17% year-on-year (YoY) and new launches contracting sharply by 28%, according to Knight Frank India’s latest report, India Real Estate: Office and Residential Market H2 2025.

The report showed an intensifying shift in India’s residential landscape, with the overall market remaining resilient, but the affordable housing segment—homes priced under ₹50 lakh—experiencing selling pressure.

As per the report, while the overall residential market remained relatively resilient, selling 3,48,247 units in 2025, homes priced under ₹50 lakh saw a marked slowdown, highlighting a structural shift in the market toward higher-value properties. Units in the ₹50 lakh–₹1 crore range also saw an 8% YoY decline, while sales of premium homes above ₹1 crore rose 14% YoY, now accounting for 50% of annual sales, the report noted.

“Consequently, homes priced above ₹1 crore now dominate the landscape, leaving a comparatively much smaller footprint of affordable housing sales across India. This trend was particularly evident in cities like Delhi-NCR, which saw a 9% decline in overall sales, and the affordable category sales fell by 25% YoY in the region,” the report highlighted.

The report also noted that in 2025, the affordable housing sector faced a significant supply crunch, as developers pivoted away from lower-ticket projects. This lack of fresh supply resulted in a 7% contraction of unsold inventory in the sub-₹50 lakh segment, even as the broader market underwent a major structural shift toward premiumisation.

“The overall residential market continues to exhibit underlying resilience, supported by a stable macroeconomic backdrop and recent repo rate cuts. However, the affordable housing segment faces pronounced pressures, with demand declining 17% YoY and supply contracting more sharply by 28% YoY,” said Shishir Baijal, CMD of Knight Frank India.

He added that this divergence signals a structural shift in the market, as capital allocation and buyer preference increasingly gravitate toward higher-value homes. The marked slowdown in new affordable launches highlights developers’ reluctance to commit capital to this segment, as they focus on premium housing, which is shaping the current housing cycle, Baijal noted.

Hyderabad, Chennai posted double-digit growth

City-wise data showed a mixed trend in H2 2025, with Hyderabad and Chennai posting double-digit growth, Mumbai and Bengaluru registering modest gains, while NCR recorded an overall 10% decline. Hyderabad topped the chart, growing by 13% to 9,327 units, followed by Chennai at 7% with 8,806 units, and Ahmedabad at 5% with 19,355 units.

Mumbai and Bengaluru both recorded modest growth of 3%, selling 50,153 and 28,774 units, respectively, while Kolkata also rose 3% to 9,382 units. Pune saw a slight decline of 4%, with 26,592 units sold, and NCR experienced the steepest drop of 10%, with 25,657 units sold. Overall, H2 2025 saw 178,046 units sold, remaining largely flat compared with the previous year.

For the full year 2025, total residential sales stood at 348,247 units, reflecting a marginal decline of 1% YoY. Hyderabad led annual growth with 12% to 18,262 units, followed by Ahmedabad at 4% with 38,403 units, and Mumbai at 1% with 97,188 units. Kolkata rose 2% to 18,752 units, while Bengaluru remained flat at 55,373 units. Pune declined 3% to 50,921 units, Chennai dropped 3% to 16,896 units, and NCR recorded the sharpest fall of 9% to 52,452 units.