Affordable housing a critical gap in India’s real estate boom

The Indian real estate sector continues to thrive, with all major segments showing robust performance. Shopping centres and warehouses saw record-high occupancy rates last year, while office leasing volumes in the first half of 2025 hit their second-highest level on record. New flat sales in the eight largest cities achieved one of the strongest half-yearly performances in 12 years. Institutional investments in the sector also surged, with transaction volumes reaching nearly $20 billion in 2024-25, doubling the figure from 2021-22. Despite these gains, a growing concern looms over the affordability crisis in the housing market. As India seeks to leverage its demographic dividend and grapples with anxieties around AI-driven disruptions to its IT services and outsourcing industries, the lack of affordable housing has become increasingly apparent. Data from Knight Frank reveals that in 2018, flats priced below 5 million rupees, approximately $52,000, accounted for 52% of launches in India's largest cities. This proportion has sharply declined, dropping to just 17% by the end of 2024. Further evidence of the imbalance comes from JLL, which reports that flats in the 5–10 million rupee price range made up 22% of sales in the first quarter of 2025, compared to 37% two years earlier. Meanwhile, the high-end and luxury housing markets are flourishing, with sales of flats priced above 10 million rupees accounting for 71% of transactions in the same period, up from 48% in the first quarter of 2024. Urbanization is accelerating across the country, with projections indicating that 71 cities will have populations exceeding one million by 2030. Against this backdrop, the demand for accessible, quality housing has never been more urgent. Knight Frank estimates that the current shortfall of affordable housing units stands at 9.4 million, highlighting a significant gap between supply and demand. The disparity in housing availability reflects broader economic and social challenges. While the upper echelons of the market benefit from increased investment and consumption, lower-income households face mounting difficulties in securing suitable living spaces. This trend underscores the uneven distribution of wealth and resources within the real estate sector, raising questions about long-term sustainability and equity. Government initiatives aimed at boosting affordable housing have had limited success so far. Policies such as the Pradhan Mantri Awas Yojana (PMAY) have sought to address the issue through subsidies and incentives, yet implementation has often lagged due to bureaucratic hurdles and insufficient funding. Additionally, land acquisition processes remain slow, further delaying project timelines and exacerbating the housing deficit. Experts warn that unless measures are significantly scaled up, the affordability crisis could hinder India's growth trajectory. With millions of young workers entering the workforce annually, the absence of adequate housing options risks creating a generation of displaced individuals unable to settle in urban centers, thereby undermining economic productivity and social cohesion. Looking ahead, there is increasing pressure on policymakers to prioritize affordable housing as part of broader economic reforms. International investors and domestic stakeholders alike are beginning to recognize that sustainable growth requires addressing the root causes of the housing shortage. Whether this shift translates into tangible policy changes remains to be seen, but the urgency of the situation is undeniable.