The sale of affordable housing units is expected to remain subdued next year too due to low supply and lower buyer interest as interest rates on loans have still not fallen enough. Experts said affordable housing sales can only be propped up through more rate cuts and incentives for developers.
Despite cuts in goods and services tax (GST) and interest rates, affordable housing sales fell in 2025 as the benefits were minimal and supply lagged.
Why Supply is Vanishing
The sale of units priced under Rs 50 lakh dropped 17% year-on-year in 2025, launches dropped by 28% and the quarters to sell level stood at 8.7 compared with 8.2 in 2024, according to Knight Frank India.
While GST reductions in September 2025 are directionally positive, the overall benefit amounts to roughly just 1% of the final product’s value, said national director- research, Knight Frank India
“Sales exceed supply/ launch volumes in this segment which is contrary to the overall market where the opposite dynamic exists. This suggests that there might be a lack of viable options in the segment which is contributing to the depressed volumes,” he said .
An Industry expert agrees. “Current trends indicate that the rate cuts have so far not had any major impact to boost the momentum significantly in this segment,” he said.
The Reserve Bank of India has cut key rates by 125 basis points since February this year.
Overall sales share of affordable housing is expected to be around 18-19% of the total housing sales across cities in 2025. Back in 2024, out of the total sales of nearly 460,000 units in top 7 cities, affordable housing share stood at 20%. This share stood the highest in 2019 when out of nearly 261,000 units sold, 38% was within this segment, according to him.
Redefining affordability
He said both volumes sold and launched have consistently fallen over the past few years as the core of the market shifted to the higher priced segments.
The chief executive of an NBFC said developers lack interest in the segment due to economics of the segment. “There is no supply in the segment as developers are hardly looking at the segment. They don’t see profit in that. Everybody is looking at luxury as that has higher margins,” he said.
Most developers have shifted to premium and luxury housing projects which carry margins of 30% and above as against affordable housing which have margins of 10- 15%, experts said.
Source from: https://www.financialexpress.com/business/news/affordable-housing-stares-at-another-year-of-subdued-demand/4090896/
