21/04/2026
India is facing a mounting housing affordability crisis, as the supply of budget-friendly homes continues to shrink across major cities. Once accessible to the salaried middle class, homes priced below ₹1 crore are rapidly disappearing, threatening the dream of homeownership for millions. Data from real estate analytics firm PropEquity reveals a stark 36% decline in the inventory of affordable and mid-income homes, from approximately 3.1 lakh units in 2022 to under 2 lakh in 2024. The decline accelerated in 2024, with a 30% year-on-year drop. Particularly severe reductions were seen in already high-priced markets: Hyderabad lost nearly 70% of its affordable housing stock, Mumbai saw a 60% dip, and Delhi-NCR’s supply halved. In NCR, only 2,672 units priced under ₹1 crore were launched in 2024, comprising just 6% of the total new supply.
Government schemes such as PMAY-Urban have set thresholds for affordable housing, with homes for the economically weaker section (EWS) capped at ₹35 lakh and 30 sq.m (approx. 323 sq.ft), and those for the low-income group (LIG) capped at ₹45 lakh and 60 sq.m (646 sq.ft). However, these targets are increasingly unrealistic in top-tier cities like Mumbai, Bengaluru, and Delhi NCR, where buyers struggle to find viable options even at ₹40–50 lakh. Homes in the ₹50 lakh to ₹1 crore range are typically available only on the city outskirts, often with long commutes.
The primary driver of this crisis is rising input costs. Escalating land prices, persistent inflation in construction materials like steel and cement, expensive borrowing, and approval delays have made mid-segment housing financially unviable for many developers. Builders now find little incentive to develop homes in the ₹50–90 lakh range. According to PropEquity, the weighted average launch price in India’s top nine cities rose 9% year-on-year in FY25 to ₹13,197 per sq.ft. A compact 600 sq ft flat at this rate costs nearly ₹79 lakh—well above the ₹45 lakh affordability benchmark. In Mumbai, where average launch prices reached ₹34,026 per sq ft, delivering units under ₹1 crore is nearly impossible without significant subsidies or trade-offs in location and quality.
This affordability crisis is unfolding against a backdrop of rapid urbanization. From 2013 to 2023, India’s urban population grew by 14%, outpacing the global average of 8.4%. Currently, 36% of India’s 1.4 billion citizens live in cities, and this is projected to reach 40% by 2030, according to the Economic Survey 2023–24. Much of the coming growth is expected in Tier II and Tier III cities, where migrants from rural and semi-rural areas seek better economic opportunities, intensifying the demand for well-located, affordable housing.
To address this widening gap, the government is considering several reforms. These include single-window project clearances, GST relief on construction inputs, and land-based incentives to reduce project costs. For example, a proposed 10% GST reduction on affordable housing could lower construction expenses by 2–3%, potentially reviving stalled or unviable projects. State-level initiatives are also showing promise. Tamil Nadu’s 2024 policy of offering subsidized land for high-density affordable housing has led to the launch of 15 new projects in Coimbatore and Tiruchirappalli. If replicated in Andhra Pradesh, Telangana, and other underserved states, such models could draw new investments and ease supply bottlenecks.
In sum, India’s affordable housing shortage is the result of systemic cost pressures, inadequate supply, and accelerating urban migration. While reforms are underway, restoring affordability will require coordinated policy action, private sector participation, and a long-term commitment to inclusive urban development.