“Sales of Mid-Segment Homes in India Plunge 36% Amid Rising Costs and Economic Uncertainty”
The Indian middle-class dream of owning a mid-segment home seems to be under significant strain, as recent data highlights a troubling trend in the real estate market. Mid-segment homes, typically priced below Rs 1 crore, have witnessed a substantial dip in sales over the past two years. The drop can be attributed to several factors, including high interest rates on home loans, escalating construction costs, and concerns over income stability among middle-income households.
A report by PropEquity reveals that sales of mid-segment homes in the top nine real estate markets in India have plummeted by 36% between 2022 and 2024. From a peak of 310,216 units sold in 2022, the figure fell to 198,926 units in 2024. The decline has been particularly pronounced over the past year, with sales dropping 30% from 283,323 units in 2023.
Hyderabad, Mumbai, and Delhi-NCR have been the hardest hit by this decline. Hyderabad, a city that had experienced rapid growth post-pandemic, saw sales of mid-segment homes nosedive by 69% from 42,747 units in 2022 to just 13,238 units in 2024. Mumbai, known as the country’s largest real estate market, experienced a 60% drop, while Delhi-NCR recorded a 45% decline. Other high-growth cities like Pune and Bengaluru reported declines of 32% and 33%, respectively, over the same period.
Interestingly, while the demand for mid-income homes has decreased, the supply of homes priced above Rs 1 crore has surged by 48% in the last two years in the top nine cities. Delhi-NCR leads this trend, with sales in this category skyrocketing by 192%, followed by Bengaluru at 187%. Cities such as Chennai, Kolkata, Navi Mumbai, Thane, and Pune also reported significant growth in sales of premium homes, ranging from 52% to 127%. However, Hyderabad and Mumbai bucked this trend, showing declines of 11% and 14%, respectively, in the premium housing segment.
According to Samir Jasuja, Founder and CEO of PropEquity, the crux of the issue lies in the dwindling supply of mid-segment homes. He emphasizes that the growing population in Tier-1 cities, fueled by migration and the rise of nuclear families, is putting additional pressure on the housing market. He warns that if the government fails to address this issue promptly, India could face a housing crisis similar to what Australia and Canada have experienced.
The need for affordable and mid-income housing has never been more critical. Projections indicate that 15 million new homes will be required in Tier-1 cities within the next five years to accommodate the rising demand. Experts suggest that the government must take immediate action to mitigate this looming crisis. Measures such as offering tax incentives and subsidies to developers to encourage the construction of affordable homes, coupled with home loan rebates and reductions in stamp duty for buyers, could help revive the mid-income housing segment.
As the Indian middle class continues to grapple with the challenges of home ownership, timely intervention by policymakers and industry stakeholders will be essential to ensure that the dream of owning a home remains achievable for millions.
