Affordable Housing Crisis Deepens as Demand Outpaces Supply
India’s affordable housing market is shrinking even as urban demand rises rapidly. Once contributing more than half of new launches in 2018, affordable homes now account for just 17% of supply across India’s top eight cities. According to a Knight Frank–NAREDCO report, the shortage already stands at 9.4 million units and could expand to 30 million by 2030, with the supply-to-demand ratio collapsing from 1.05 in 2019 to just 0.36 in 2025.
Developers are steadily moving away from low-cost projects, priced below ₹50–60 lakh, due to rising land values, compliance burdens, and shrinking profit margins. Big real estate names like DLF, Prestige, and Godrej have shifted focus to mid- and premium housing, where returns are stronger. In the first half of 2025, only 30,806 affordable units were launched in major cities—far below actual sales and significantly lower than last year’s figures.
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This decline is also reflected in home loan trends. The average loan size in metropolitan regions has jumped to ₹74 lakh, highlighting both the lack of affordable choices and the growing focus on higher-income buyers. Experts note that millennials and Gen Z, who will dominate future housing demand, are influencing market designs with preferences for compact homes, flexible layouts, and lifestyle-driven amenities.
Industry leaders stress that the imbalance poses a risk to inclusive growth. Rising costs, limited land availability, and infrastructure gaps are deterring private developers. Without policy support—such as unlocking PSU land, easing approval norms, and offering subsidised construction finance—supply will remain well below demand, pushing affordable housing further out of reach.
Experts warn that unless urgent reforms are introduced, India’s ambitious “Housing for All” vision may remain unfulfilled. With demand surging, especially among young professionals, only bold supply-side measures and innovative financing can bridge the widening gap between what buyers need and what the market offers.
