In 2023, India’s luxury residential property market experienced a boom, with 3.29 lakh housing units sold in 2023, according to Knight Frank India data. However, the affordable housing segment saw a decline.
For the first time, sales in the premium segment (above Rs 50 lakh) surpassed those in the mid-segment, with 72% of housing units sold in the premium category. Units costing more than Rs 1 crore accounted for 37% of sales.
Several news outlets have reported on this shift towards expensive properties, saying that this trend highlights a K-shaped growth trajectory in India’s economy since the COVID-19 pandemic, benefiting higher-income groups while leaving the lower middle class and rural populations struggling.
For instance, DLF sold all the 795 flats worth a whopping Rs 5,590 crore within three days of launching, in Gurugram. The Arbour, launched by DLF in March 2023, had also seen pre-launch sales worth Rs 8,000 crore in three days.
On the other hand, the Delhi-NCR market witnessed a 44% fall in the sales of affordable homes to 7,487 units in 2023 from 13,290 units in 2022.
Rising property prices, higher home loan rates, and the pandemic’s adverse effects have dampened demand in the affordable segment, which now constitutes only 30% of the market compared to 54% in 2018.
Despite affordable housing being a priority for the government, the benefits have not sufficiently reached lower-income groups.
In 2020, affordable housing constituted of 39% of total sales. This number fell to 19% in 2023, the Financial Express reported, citing data from Anarock Property. In contrast, sales of premium properties have surged in regions like the NCR and Mumbai.
Over the last five years, the share of sales of luxury homes has risen from 7% to 25%. In pre-Covid 2019, luxury homes accounted for approx. 11% of the overall new supply in the top 7 cities.
This article was first published on The Wire on May 24, 2024.
