Demand for affordable homes dips as buyers shift to premium segment

Affordable housing sales saw a steep drop in the first quarter of 2026, with homes priced below Rs 50 lakh falling 23% year-on-year to 16,273 units across eight major cities, according to Knight Frank India. The fall has mainly been due to fewer new launches in this segment. Builders say that rising input costs, especially land, have made it difficult to develop lower-priced homes. At the same time, since the Covid-19 pandemic, demand has been shifting towards more expensive properties. The report showed that all eight cities: Mumbai, Delhi-NCR, Pune, Bengaluru, Hyderabad, Chennai, Ahmedabad and Kolkata, recorded a decline in affordable housing sales during January to March. The slowdown was also seen in the Rs 50 lakh to Rs 1 crore segment, where sales dropped 12% to 23,567 units. However, higher-priced homes performed better. Sales in the Rs 1–2 crore segment rose 10% to 24,657 units, while the Rs 2–5 crore category increased 17% to 16,075 units. The Rs 5–10 crore segment also saw a slight dip, down 3%, with 3,338 units sold. In the premium categories, homes priced between Rs 10–20 crore saw a 12% rise in sales to 738 units. The Rs 20–50 crore segment recorded a sharp 80% jump to 165 units. But homes priced above Rs 50 crore saw sales fall 93% to just 12 units. Overall, housing sales across all price segments fell 4% to 84,827 units during the quarter. The report said high property prices and uncertainty due to the West Asia conflict affected demand. "Market activity remained skewed toward the higher end even as growth moderated, while volumes continue to slide in ticket sizes below Rs 10 million (1 crore)," Knight Frank said. The share of homes priced below Rs 1 crore dropped to 47% of total sales, compared to 54% in the same period last year. Shishir Baijal, International Partner, chairman & managing director, Knight Frank India, said the market is seeing some slowdown after a period of strong growth. "While this phase can be partly attributed to a natural consolidation after strong growth, the continued rise in prices alongside softening volumes indicates growing pressure on affordability and absorption," he said. He added that global uncertainties have also affected buyer interest. Meanwhile, new housing supply across the eight cities fell 2% to 94,855 units in the January–March period.