In most megacities, new affordable housing launches have been negligible.
The real estate sector in India has presented a lengthy list of demands to Finance Minister Nirmala Sitharaman in anticipation of the Union Budget for 2026-27, which will be announced on February 1, 2026. It is crucial that concrete measures are implemented to revive affordable housing. This segment will remain a cornerstone of India's residential real estate market for many reasons in the foreseeable future.
In a country with over 1.4 billion people, developing new policies to make housing accessible for the common man in India is essential. However, it is even more critical to revise outdated concepts. For example, the government's definition of affordable housing needs to be reconsidered immediately.
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What is affordable housing according to the government definition?
Based absolutely on pricing, various government agencies categorise properties worth under INR 45 lakh as affordable homes. For loan purposes, banks consider properties worth up to INR 65 lakh as affordable housing for mid-income groups.
This definition remains unchanged, even though property prices in India’s key housing markets have appreciated by 45-90% since 2019.
This means that no matter which definition one chooses, a homebuyer looking for affordable properties in India’s prime residential markets would be disappointed to find a suitable unit. This is because new launches are primarily concentrated in the mid- and luxury segments, and supply in the affordable segment has been negligible over the past couple of years, according to Square Yards data.
The ground reality
Meanwhile, the developer community has already made tweaks to how they define various budget categories. Most recent industry reports put mid-segment properties in the INR 80 lakh to INR 1.5 crore band. That leaves homes of up to INR 80 lakh in the affordable category, a price bracket that has seen only a few launches even in Tier-II markets.
This is one reason sales in the country’s mega markets have been consistently declining (even as sales volume has been increasing, driven by the luxury housing segment) over the past two years, as affordability stress has priced out a large number of aspiring homebuyers.
While the recent GST reforms and the Reserve Bank of India's rate reduction have had some impact on pricing, more targeted measures are required to bring these buyers back to the market and maintain demand fundamentals.
Redefining the affordable housing segment would be a good start.
