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ndia's housing market has undergone a significant shift since the Covid-19 pandemic, with a growing focus on luxury properties. In contrast, the affordable housing segment has struggled due to rising interest rates, increasing property prices, and declining supply. This trend is evident in Knight Frank India's report on real estate activity in the third quarter of 2024, which shows that 46% of total home sales across top eight cities were in the luxury category (homes priced above ₹1 crore). The mid-range (₹50 lakh - ₹1 crore) and affordable housing segments saw year-on-year declines of 13% and 14%, respectively.

    Knight Frank's data reveals a consistent downward trend in affordable housing sales for 13 straight quarters, with developers shifting focus to more profitable luxury projects. "Most developers have moved to the upper end of the market where returns are higher," said Gulam Zia, Senior Executive Director at Knight Frank India. Interest rates remain a significant challenge, but a lack of supply addition is another major issue.

    Industry experts agree that rising property prices and interest rates have led developers to focus on premium and luxury projects. However, with inflation below the Reserve Bank's tolerance band, a repo rate cut may revitalize the affordable housing segment, which has been severely impacted by a 250-basis point hike in the repo rate since the pandemic.

    The ₹2.30 lakh crore subsidy under Pradhan Mantri Awas Yojana Urban 2.0 is expected to boost the segment. However, developers argue that the present definition of affordable housing makes it unviable for them to supply such homes, citing a lack of new launches in recent years.