India’s property sector may be riding strong macroeconomic tailwinds, but the deepening affordable housing slump threatens to widen structural imbalances in urban growth, industry leaders cautioned at a national real estate forum this week.
Speaking at ETRECA 2026, the chairman of NAREDCO said that while India’s GDP growth above 7 per cent and expanding credit availability continue to underpin developer confidence, lower ticket-size housing has witnessed a sharp fall in transactions over the past two years. Commercial lending growth of nearly 15 per cent annually has improved liquidity conditions for both developers and buyers. Yet headline expansion masks divergence across segments. Mid-income and premium categories have absorbed a larger share of post-pandemic demand, offsetting the slowdown at the base of the pyramid. According to sector estimates cited at the event, affordable housing transactions have declined by close to a fifth over the last 24 months. Analysts attribute this to rising land costs, input inflation and urban price escalation, which have made entry-level homes harder to deliver within regulated affordability thresholds. The affordable housing slump carries broader implications for inclusive urbanisation. Lower-income households form the backbone of metropolitan labour markets. Without accessible homeownership options near employment hubs, cities risk lengthening commute times and increasing informal settlement growth outcomes that run counter to climate-resilient and equitable planning goals.
Government interventions such as Pradhan Mantri Awas Yojana have provided targeted relief through interest subsidies. However, industry observers argue that a more coordinated policy recalibration including faster approvals, serviced land supply and infrastructure-linked incentives will be required to revive momentum sustainably. Infrastructure expansion remains a structural positive. Projects such as metro networks, coastal corridors and new airports are reshaping demand catchments across major metros, particularly within the Mumbai Metropolitan Region. Connectivity upgrades are enabling integrated township formats that combine residential, retail and social amenities. At the same time, the sector faces a workforce bottleneck. Developers flagged an estimated shortage of nearly two million skilled construction workers nationwide, a gap projected to widen by the end of the decade. While access to capital has improved compared to earlier cycles, labour availability and skill depth are emerging as execution constraints. Industry representatives from Hiranandani Group and other large developers stressed that long-term resilience will depend on balancing premium-led growth with broad-based housing access. Senior living, co-living and branded formats may expand the market’s diversity, but affordable housing remains central to sustaining urban productivity.
As India advances toward becoming the world’s third-largest economy, the trajectory of the affordable housing slump will likely determine whether real estate growth translates into inclusive city-building or deepens spatial inequality.
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