The past few years have seen a striking shift in India's residential real estate sector, with lavish property launches skyrocketing while more economical units remain steady. According to data analysis by leading consultancy JLL India, new constructions of big-ticket homes priced over ₹1.5 crore surged more than 1000% from 2019 to 2023. In the same period however, launches of modest units under ₹75 lakh saw virtually no change, pointing to developers' focus on the premium segment.
A key driver of this trend is the expanding market for luxury housing. India's wealthy population is projected to nearly triple in the coming decade, fueling demand. The pandemic also increased preferences for larger, well-appointed living spaces suited to new remote work arrangements. As a result, average flat sizes grew 11-51% across major cities over the last five years. Additionally, mounting costs have led builders to prioritize the higher-margin luxury category for better returns.
While sales of more expensive abodes rose substantially, their launches still outpace demand indicating a profitable outlook. In contrast, modest unit offerings failed to keep pace with steadily rising sales of 27%. With inventory plunging to a decade low, affordable options face growing pressure.
Affordability metrics did improve between 2019-2023 thanks to steady income growth. However, price increases averaged 26% during this period, potentially reversing those gains if continued unchecked. Moreover, first-time buyers particularly from smaller cities rely on new supply under ₹75 lakh for entry into homeownership. Stagnation in this segment threatens their aspirations unless addressed.
Going forward, balancing the needs of luxury and mass housing will be key. Strategic incentives and policies can encourage inclusive development while market forces reliably cater to upper-income demand. With careful guidance, India's real estate sector remains well-positioned to house a broad spectrum of its vast population at different life stages. Sustained progress on this front will define its role in achieving larger national goals.
