Luxury living ascends, affordable housing wanes in India's top 7 cities

Real estate shift: The property market in India's top seven cities witnessed a notable shift in the first quarter of 2024, with luxury properties gaining ground while affordable housing faced a decline.

According to recent data from Anarock, the share of luxury homes priced above Rs 1.5 crore surged to 21 per cent, marking a substantial increase from the 7 per cent recorded five years ago in the same quarter. 

Meanwhile, affordable housing's share dwindled to 20 per cent from its previous robust position of 37 per cent.

Affordable housing shrinks

In Q1 2024, approximately 27,070 luxury homes were sold out of a total of 1.30 lakh units across the top seven cities. This marks a threefold increase from the sales figures five years ago, highlighting the growing demand for upscale properties. 

Conversely, the affordable segment witnessed sales of around 26,545 units, constituting a 20 per cent share of total sales in the same period, down from 37 per cent in Q1 2019.

City-wise market trends

In the first quarter of 2024, real estate sales across various segments and cities in India showed notable trends. The National Capital Region (NCR) witnessed a total of 15,645 units sold, with the affordable segment comprising 4,305 units, the mid and high-end segment accounting for 5,280 units, and the luxury segment seeing 6,060 units sold. 

Meanwhile, the Mumbai Metropolitan Region (MMR) emerged as a significant hub with a total of 42,930 units sold, including 12,650 affordable units, 20,920 mid and high-end units, and 9,360 luxury units. 

Hyderabad showcased a strong demand for mid and high-end properties, with 13,620 units sold in this category, contributing to a total of 19,660 units sold in the city. 

Bangalore recorded sales across segments, totalling 17,785 units, with the mid and high-end segment dominating at 12,950 units. Pune, with a total of 22,990 units sold, saw substantial sales in the mid and high-end segment (16,860 units). 

Chennai and Kolkata had comparatively lower sales volumes, with Chennai recording 5,510 units sold and Kolkata witnessing 5,650 units sold. Nationally, the real estate sector exhibited robust activity, with a total of 130,170 units sold, highlighting the diverse market dynamics across different cities and segments.

Market challenges addressed

Anuj Puri, Chairperson, Anarock commented on the trend, highlighting the increasing popularity of luxury homes attributed to larger spaces and prime locations. 

He highlighted the challenges faced by the affordable housing sector, indicating a need for government interventions to stimulate demand and supply.

“As luxury homes gain more traction in both new supply and sales, affordable housing continues its retreat to the sidelines. The luxury segment is driven by a mounting appetite for bigger homes by branded developers in superior locations," Puri said. 

"Affordable housing, on the other hand, is driven primarily by lower ticket sizes. The downward spiral of this erstwhile posterchild of the Indian housing industry began during the pandemic, and then morphed into a broader malaise. Even as the nation awaits the results of the ongoing general elections, any affordable housing revival will hinge on further government sops and incentives for buyers and developers,” Puri added.

Past to present: Real estate dynamics

The shift in market dynamics is also reflected in new launches, with luxury housing projects accounting for 25 per cent of total launches in Q1 2024, compared to just 9 per cent five years ago. 

In contrast, the share of affordable housing launches dropped to 18 per cent from 40 per cent in 2019.

Overall, real estate in India's top cities is witnessing a notable transformation, with luxury properties gaining momentum while affordable housing faces challenges requiring strategic interventions for revival.