A Market in Transition
India’s housing market is undergoing a significant transformation. Despite steep property price hikes, demand is not just holding steady—it’s gravitating toward premium, quality-driven residential offerings. Multiple recent surveys and reports highlight this evolving landscape:
- ANAROCK’s Homebuyer Sentiment Survey (H1 2025) reveals that real estate remains the top investment choice, with 63% of respondents prioritizing it over stocks, gold, or fixed deposits. Despite financial pressures, buyers are showing greater interest in larger and premium homes.
- Similarly, a Republic World feature points out that only 17% of buyers now opt for homes under ₹45 lakh, while a notable 36% prefer premium properties, signaling a clear shift away from traditional affordability thresholds.
An India Today article further underscores the changing priorities: homebuyers increasingly value quality, timely delivery, and livability, indicating expectations beyond mere affordability.
The Price Burden: Delhi in Perspective
While some buyers elevate expectations, others face the stark reality of soaring prices:
- In New Delhi, escalating property costs continue to dampen housing hopes, particularly for earnest home seekers. Many report feeling priced out of their own city of dreams.
The disparity between demand for premium homes and the stark inaccessibility of affordable options underscores the duality of today’s real estate challenge.
Underlying Trends: What's Driving the Shift?
Several key dynamics are at play:
1. Investment Psychology Over Practical Utility
For many buyers, homes have become more of a financial asset than a dwelling. The persistence of speculative demand—even amid poor rental yields—suggests that real estate is viewed as a favored avenue for capital appreciation. In fact, rising property prices have driven many to prioritize space, luxury, and investment potential.
2. Affordability Constraints and Limited Supply
A recent Moneycontrol insight highlights a grim reality: average prices in top Indian cities have surged from approximately ₹6,001 to ₹8,990 per square foot between Q2 2023 and Q2 2025—a 50% leap. Moreover, 81% of prospective buyers cite rising home prices as a major concern.l
Affordable housing is also being squeezed out: its share in total sales has decreased from 38% in 2019 to just 18% by 2024, and new launches in this category plunged from 40% to a mere 12% in the first half of 2025.
3. Premium Preference Amid Economic Uncertainty
Even amid rising costs, consumers signal a willingness to spend more—if the product meets their expectations. The appeal of ready-to-move, spacious, and high-quality units is driving premium segment growth, despite economic pressures.
Delhi’s Gloom Amidst National Change
The contrast between Delhi’s woes and the broader national trend is stark:
- While premium segments see newfound strength, cities like Delhi reflect sharper affordability challenges, where potential buyers face both price barriers and diminishing supply of affordable homes.
- Some reports indicate a 50% rise in property rates in key metros over just two years—marking a significant affordability crisis.
What This Means for Stakeholders
For Developers
- Tilt toward premium offerings: Developers are likely to ramp up mid- to high-end projects, aligning with rising buyer aspirations.
- Premium as a strategic anchor: With limited affordable housing demand, premium projects offer better margins and quicker sales cycles.
- Need for delivery assuredness: As quality and timeliness gain importance, developers who can deliver on both could secure buyer trust and market leadership.
For Buyers
- Affordability is slipping from reach: Most middle-class buyers may find themselves navigating a smaller subset of housing options—often in oversaturated or premium segments.
- Elevated expectations: Buyers now demand more than square footage—they want complete lifestyle value (amenities, location, quality).
Stress on practical investment: With affordability strained, investors must be cautious about speculative buying.
For Policymakers
- Affordable housing must be revived: The sharp decline in affordable stock warrants policy intervention—whether through incentives, subsidies, or increased supply.
- Regulate speculative pricing: Measures to temper unbridled price inflation are vital to preserve broader housing access.
- Balance premium growth with inclusivity: While premium markets can drive growth, inclusive policies must ensure middle- and low-income households remain served.
A Market at Crossroads
India’s real estate market today lies at an interesting crossroads:
- On one hand, investment-led demand for premium space remains robust. Buyers expect quality, timely delivery, and livability, even at elevated price points.
- On the other hand, affordability is crumbling, particularly for genuine homeowners in metros like Delhi. The supply of cost-effective options continues to decline.
Final Word
India’s housing landscape is reshaping itself. A premium-led market reflects evolving lifestyles and priorities—but also amplifies a deepening affordability crisis.
For the sector to remain inclusive, stakeholders must strike a delicate balance: catering to premium buyers while reviving affordable housing, all underpinned by sound regulation and forward-looking policies. Without this equilibrium, India risks turning homeownership from an aspiration into an endangered pursuit—for many of its citizens.
