The sparkling glass houses of luxury flats in Mayanagari Mumbai’s skyline only tell us a mere half of the story about the Indian great, booming, real estate industry. Behind the glittery glasses of success hides an unsettling truth where millions of ‘WE’, the middle-class ‘aam janta’ are being priced out of their goal of homeownership, resulting in a hidden crisis that jeopardises the country’s social structure.
Affordable housing, was, from a long period of time, a cornerstone of Indian urban development, with the goal of providing shelter to millions of middle- and low-income families. However, the industry is currently experiencing an alarming downturn, which is compounded by a variety of economic, regulatory, and commercial factors. Rising borrowing rates, combined with an urban-centric real estate boom that marginalises the economically disadvantaged, are making India’s housing scene increasingly unattainable to many people.
Let’s start with decreased sales of affordable housing.
- According to a Knight Frank analysis, sales in the affordable housing segment (<Rs 5 million) continued to face challenges as sales in this category fell by 43 per cent YoY to 4,223 units in 2024.
- Similarly, sales in the Rs 5-10 million bracket fell by 45 percent year on year, dropping to 7,510 units.
These findings demonstrate an increasing market preference for premium and luxury residences. This can be used to understand that there is a driving force in the direction of luxury housing, where the richie rich folks are driving demand for gigantic homes with stylish facilities in desirable locations.
This decline reveals a widening inequality in the housing market, as rising borrowing costs and economic uncertainty have prevented prospective buyers from purchasing properties. The affordability gap has worsened as interest rates on house loans rise, leaving even subsidised homes out of reach for many.
The ordinary Indian family’s ambition of owning a home has never been more distant. With a price-to-income ratio of 11, it takes 11 years of a household’s total salary to acquire a basic 90-square-meter flat, making India’s housing market twice as costly as what is deemed reasonable. While affluent countries like the United States, Australia, and Germany have more accessible housing markets, India’s affordability dilemma matches that of other developing countries.
Affordability is a continuous concern.
Home affordability is a significant issue in India, with growing costs making homeownership out of reach for many. Chairman and MD of Knight Frank India, Shishir Baijal stated, “Owning a house is a key ambition for Indians, yet it remains a huge obstacle for a large percentage of the population. While measures such as the Pradhan Mantri Awas Yojana (PMAY 2.0) have offered some assistance, the affordability gap remains, especially in metropolitan areas.”
Baijal said that existing designs frequently fail to reflect urban reality. “Under PMAY 2.0, recipients receive a 4% interest subsidy on loans up to Rs 8 lakh, if the housing value is less than Rs 35 lakh. However, in metropolitan areas, this limit is frequently exceeded, removing many potential benefits. Increasing the barrier to Rs 50 lakh may make the plan more successful.”
Beyond the Luxury Bubble: Who Benefits from the Real Estate Boom?
The current upward spike in the real estate market creates a dilemma. While developers applaud the growth of luxury residences and commercial complexes, the underlying issue of affordable housing remains unresolved. The expansion of high-end buildings and premium projects, backed by rich purchasers and business interests, has produced a market that caters mostly to the top tier of society.
Vice- Chairman of NAREDCO, Dr. Niranjan Hiranandani, stressed the need for a definite solution to the problems of affordable housing mentioning that the affordable housing category is now seeing negative growth, and asked to encourage increased funding to revitalise this critical sector, promoting inclusion and sustainable urban growth. Along with housing, improvements in energy and transportation infrastructure are critical. He emphasised the importance of these places for long-term urban growth and higher quality of life.
What is The Rental Housing Challenge?
The rental market, which is, myriad of times, taken as an option for folks who cannot afford to purchase a home, is similarly fraught with difficulties. During a pre-budget consultation, Mr Niranjan Hiranandani, a famous real estate maestroo, emphasised the need for rental housing changes. Issues like a lack of tenant protection regulations, gigantic rental fees, and an insufficient supply of quality rental units just multiply the housing situation.
Let’s start with The Transparency Deficit
Experts describe India’s real estate system as “semi-transparent.” While recent changes like as RERA and land record digitisation have helped, the business still lacks the openness that exists in industrialised markets. This opacity emerges most clearly in land use planning, with just 28% of Indian cities having approved master plans, and even these lack detailed implementation strategies.
Moving on with The Competitive Conundrum.
This dearth of openness leads to a vicious circle. The high entrance hurdles for new developers have resulted in an industry dominated by existing firms that can charge premium fees. Unlike other industries, real estate in India has several businesses sustaining extremely high profit margins (above 20%) in the long run, implying a lack of healthy competition that eventually harms consumers.
Now comes The Wealth Lock-In Effect
The existing system has produced a self-reinforcing loop, making real estate an appealing investment for people with undeclared money. It’s striking that real estate accounts for 77% of India’s household wealth, compared to 62% in China and only 44% in the United States. This concentration of wealth in real estate drives up costs, making housing increasingly unreachable for the middle class janta.
How can we break the cycle?
The solution is not in band-aid remedies, but in genuine transformation. While government plans frequently focus on boosting housing stock through subsidies, the objective is to address the underlying cause, which is genuinely freeing land availability in a controlled and transparent manner. This attempt have the potential to increase the competition among developers, put downward pressure on pricing, and eventually make housing more accessible.
What Lessons can we learn from Global Models?
India may also learn from international cheap housing concepts. For example, Singapore’s HDB (Housing and Development Board) has successfully established a public housing system that combines affordability with quality. Similarly, Germany’s rent control rules have guaranteed that the rental market remains stable over time. Adopting and modifying such methods might help solve India’s housing issue.
If we do not wake up now, what are the human cost of inaction!!!
The downfall of affordable housing is not just random cause, rather it is a humanitarian disaster and an anxious concern of economics. Millions of families are forced to live in inadequate conditions, with no access to essential services like clean water, sanitation, and education. The psychological toll of home insecurity, like stress, worry, and a loss of dignity, is immeasurable.
Conclusion
As India enters critical crossroads in the half way of decade in 2025, the demand for reform has never been more pressing. The government’s recent proposal of a middle-class housing project highlights understanding of this issue, but at the end, the success demands a robust strategy including not just building more number of blocks as housing, but also fundamentally altering land markets, increasing transparency, and fostering a more competitive real estate industry.
The stakes are high. Access to affordable housing for the middle class is not only about giving shelter, but it also means a lot deep and much more. It is about ensuring accessibility, producing wealth, and constructing a more egalitarian society in which the benefits of growth are available to all, not just those at the top of the social ladder. The moment has arrived to shift India’s real estate boom from one of exclusion to inclusion.
India’s affordable housing sector is in a catastrophic state. Rising borrowing rates, followed by an urban-centric real estate boom, and the ever-famous ‘SYSTEM’S’ systemic policy gaps have all contributed to an atmosphere in which millions of ‘WE, THE PEOPLE OF INDIA’ continue to dream of owning Our own house. Addressing the situation requires a multifaceted strategy that involves regulatory reforms, corporate sector cooperation, and public awareness.
Without quick action, the loss in affordable housing would worsen social inequities while also jeopardising India’s long-term economic and social stability.
