Luxury Homes Lead Market Growth as Affordable Segment Faces Challenges​

In the January-March quarter of 2025, sales of affordable homes priced below Rs 50 lakh declined by 9% in major cities, according to a new report by Knight Frank India. Despite being a popular market segment, sales of affordable homes were limited to just 21,010 units across eight major cities, highlighting challenges faced by buyers and developers in this price range.

Key Reasons Behind the Decline in Affordable Home Sales

The decline in sales of affordable homes can be attributed to a combination of high house prices, increased interest rates, and reduced supply. These factors have caused significant strain on home buyers looking to purchase properties in the Rs 50 lakh or below segment, with affordability becoming a key concern for many.

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Impact on Other Price Segments

In contrast to the affordable home segment, sales in higher price segments have seen a noticeable increase. In the Rs 50 lakh to Rs 1 crore residential segment, sales also declined by 6%, totaling 26,832 units. However, a shift towards premium housing was observed, with sales of homes priced over Rs 1 crore experiencing growth.

Growth in Premium Housing Market

• Rs 1-2 Crore Segment: Sales increased by 2% to 22,330 units.
• Rs 2-5 Crore Segment: A significant growth of 28% led to sales of 13,735 units.
• Rs 5-10 Crore Segment: Sales surged by 82%, totaling 3,448 units.
• Rs 10-20 Crore Segment: Sales more than doubled to 658 units.
• Rs 20-50 Crore Segment: Sales in this luxury segment also more than doubled, reaching 92 units.
• Over Rs 50 Crore Homes: Sales in this high-end category saw a substantial rise, reaching 169 units.

Despite the overall decline in affordable home sales, the real estate market shows strength in higher price segments, particularly the luxury and premium categories. With increasing interest in premium properties, home buyers are opting for higher-value investments, potentially due to rising incomes, increased savings, and changing preferences.

As the market evolves, developers may need to focus on bridging the affordability gap while also catering to the growing demand for luxury homes across major cities like Hyderabad, Kolkata, and Chennai.