Affordable Housing Sales Fall 9% in Q1 2025, While Luxury Segment Surges: Knight Frank Report

Sales of affordable homes in India dropped significantly in the first quarter of 2025, according to real estate consultancy Knight Frank India. The latest report, titled India Real Estate: Residential and Office (January–March 2025), shows that homes priced below ₹50 lakh saw a 9% year-on-year decline in sales across eight major Indian cities. A total of 21,010 affordable units were sold between January and March 2025, down from the same period last year.

This drop in affordable housing sales has been linked to rising property prices, high home loan interest rates, and limited supply in the budget-friendly segment. Buyers looking for homes within ₹50 lakh are finding it difficult to make purchases due to increased financial pressure and fewer new affordable projects entering the market.

Homes in the ₹50 lakh to ₹1 crore range also saw a dip in demand. Sales in this segment declined by 6% year-on-year, reaching 26,832 units. Knight Frank explained that even this mid-income category faced challenges as buyer interest shifted more toward premium and luxury housing options.

"While higher-priced homes continue to push overall market growth, sales in the ₹50–100 lakh and sub-₹50 lakh brackets declined by 6% and 9% respectively," the report stated. The consultancy emphasized that price-sensitive buyers have been affected the most by the current market conditions, including rising home prices and interest rates. Moreover, developers have focused more on launching premium projects, leading to a shortage of new affordable homes.

In contrast, the premium and luxury housing segments experienced strong growth in the same quarter. Homes priced between ₹1 crore and ₹2 crore saw a slight rise in sales of 2%, totaling 22,330 units. The ₹2 crore to ₹5 crore range witnessed a significant 28% jump, with 13,735 units sold.

Even higher price categories saw impressive numbers. Homes in the ₹5 crore to ₹10 crore segment recorded an 82% increase in sales, reaching 3,448 units. Ultra-luxury homes also performed well—properties priced between ₹10 crore and ₹20 crore sold 658 units, more than double from last year. Homes in the ₹20 crore to ₹50 crore bracket had a similar rise, with 92 units sold. Meanwhile, 169 homes priced above ₹50 crore were purchased, showing a sharp spike in demand for super-luxury properties.

Knight Frank noted that developers are investing heavily in high-end and luxury residential projects due to higher profit margins and consistent buyer interest. However, this shift is widening the supply gap, as affordable homes become more scarce in the market.

Despite the contrasting trends between affordable and luxury housing, the overall residential market showed stability. Total home sales across the top eight Indian cities, Mumbai Metropolitan Region (MMR), Delhi-NCR, Bengaluru, Chennai, Hyderabad, Pune, Kolkata, and Ahmedabad—increased by 2% year-on-year, reaching 88,274 units in the first quarter of 2025.

This mixed trend highlights a growing divide in India’s real estate sector, where luxury housing continues to thrive, while affordable housing faces rising challenges.