Affordable Housing Sales Share Plummets

According to ANAROCK Research & Advisory, affordable housing—homes priced at ₹45 lakh or less—accounted for just 18% of total sales in the top seven cities in H1 2025. That translates to 34,565 units out of 1.90 lakh sold. In comparison, this segment commanded a 38% share in 2019, reflecting a steep fall in demand.

The supply side tells a similar story. Affordable housing launches have dropped from 40% of total launches in 2019 to just 12% in H1 2025. The slowdown is significant for a segment catering to around 17.76% of India’s population.

MSMEs in the Crosshairs

MSMEs contribute nearly 30% to India’s GDP and over 45% to exports, employing more than 260 million people in both formal and informal sectors. Industries like textiles, engineering goods, auto components, gems and jewellery, and food processing are heavily labour-intensive and central to the affordable housing buyer base.

The sector’s export footprint has expanded dramatically—228% in four years, from 52,849 exporters in FY 2020-21 to 173,350 in FY 2024-25. However, the new US tariffs could reverse these gains, hitting incomes and job stability among MSME workers.

Expert Warning: “Hope Snuffed Out”

Dr. Prashant Thakur, Executive Director – Research & Advisory, ANAROCK Group, warns that the tariffs could deal a decisive blow to the segment:

“This category of homes priced ₹45 lakh or less was already gravely hit by the COVID-19 pandemic and is still struggling to find any semblance of firm ground. Trump’s mercenary tariffs will snuff out even the dimmest ray of hope for this segment.”

Developer and HFC Impact

A prolonged demand slump could force developers to curtail launches due to tighter working capital, further squeezing a segment already battling input cost inflation. Housing finance companies (HFCs) serving this market may face higher loan defaults or a slowdown in disbursements as demand weakens.

The Road Ahead

The future of India’s affordable housing segment may hinge on swift government intervention. Coordinated policies, fiscal safeguards, and buyer-focused support measures will be essential to prevent a deeper crisis. Once the poster child of housing policy and a key pillar of electoral promises, affordable housing now finds itself in uncertain territory.

Also Read: http://affordable housing in india

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Since 2010, approximately 47 real estate IPOs have been listed, with over INR 300 billion raised from more than 20 IPOs in the post-pandemic period (2021 onwards). The current year has already surpassed the total number of IPOs seen in 2023, with 123 fresh issues reported as of October 20, 2024, driven by a robust economic outlook and increasing participation from both retail and institutional investors.

Factors contributing to this positive momentum include strong housing demand, record office leasing activity, expansion plans from flex space operators, and a resurgence in tourism. The notable performance in 2024 has nearly doubled the amount raised compared to 2023.

Housing Finance Companies (HFCs) and Real Estate Investment Trusts (REITs) have been the primary drivers of capital raised, accounting for nearly 70% of total funds collected since 2021. In total, 21 real estate IPOs have occurred since 2021, raising INR 319 billion—more than double the amount raised in the preceding four years (2017-2020).

Badal Yagnik, CEO of Colliers India, highlighted the significant role of HFCs, which have secured 46% of the capital raised in the post-pandemic period, followed by REITs at 22%. He noted that the outlook for IPO activity remains strong, supported by increased investment in infrastructure, favorable demographics, and robust consumer spending.

As the market continues to evolve, real estate IPOs have diversified, with leading flex space operators expediting their listing plans. The BSE Realty Index has seen impressive gains of over 30% year-to-date, outpacing the Sensex. Notably, over 90% of the real estate IPOs launched in 2024 have been oversubscribed, signaling heightened investor confidence in the sector.

With a positive trajectory expected to continue, real estate companies, including flex operators and new REITs, are lining up for upcoming IPOs, further reflecting the dynamic nature of India’s real estate market.

Also Read: The Hive Hostels to Expand by 3,000 Beds and Digitalize Operations Ahead of IPO

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