Introduction
There has been a shift towards luxury housing in India over the past four years that is far more dramatic than most homebuyers probably realise. A new report from CareEdge Ratings shows that homes priced below ₹1.5 crore made up 85 percent of all new launches across the top seven cities back in Q1 2022. By Q1 2026, that share has fallen to just 47 percent. That is not a gradual drift, that is a fundamental reshuffling of what developers are choosing to build.
How Steep Is the Drop, Really
To put the numbers in perspective, affordable and mid range homes under ₹1.5 crore went from being nearly nine out of every ten new units launched to less than half in just sixteen quarters. The decline did not happen in one sudden move either. The share slipped to 57 percent by Q1 2025 before falling further to 47 percent this year, suggesting the trend has been building momentum rather than reversing.
Where That Supply Went Instead
The homes that used to fall in the affordable bracket have not disappeared, they have simply moved up the price ladder. The ₹1.5 crore to ₹4 crore segment jumped from 14 percent of launches in Q1 2022 to 44 percent by Q1 2026. Meanwhile, homes priced above ₹4 crore, which barely registered at 1 percent of supply four years ago, now account for 9 percent, effectively a nine fold jump in their market share.
Why Developers Are Building This Way
Rising land acquisition costs, higher construction expenses, and tighter compliance requirements have squeezed the economics of building affordable housing in a way that makes it genuinely difficult to turn a profit on lower ticket projects. Rajashree Murkute, Senior Director at CareEdge Ratings, pointed out that this shift towards luxury housing in India reflects developers leaning into mid premium and luxury segments partly because customer preferences have moved there too, and partly because the cost structure leaves them little choice.
The Numbers Behind Developer Confidence
Collections from large scale launches crossed ₹90,000 crore in FY26, while total bookings went past ₹1.5 lakh crore. Debt levels among developers have stayed broadly stable through this period even as collections improved, which points to stronger balance sheets across the sector. That financial cushion matters, because it gives bigger developers more room to absorb rising input costs without passing every rupee onto buyers immediately.
A Divide Between North, West, and South
Interestingly, this premium housing launches trend is not playing out evenly across the country. High priced markets like Delhi NCR, Pune, and the Mumbai Metropolitan Region have actually seen sales soften somewhat, while southern markets, led by Chennai, have stayed comparatively resilient. This suggests buyer appetite for premium homes varies quite a bit depending on local income patterns and existing price levels in each city.
What This Means If You're House Hunting
If you are specifically looking for something under ₹1.5 crore in a top tier city right now, expect fewer new options coming to market compared to a few years ago, and expect more competition for whatever affordable stock does get launched. The affordable housing decline documented in this report is a real supply constraint, not just a pricing trend, and it is likely to keep nudging first time buyers toward either smaller cities or slightly older, resale inventory.
Not All Developers Will Benefit Equally
While larger, well capitalised developers appear positioned to ride out this shift comfortably, smaller and mid sized players with thinner balance sheets could find themselves squeezed between rising costs and a shrinking affordable segment that used to be their bread and butter.
Summary
The shift towards luxury housing in India documented in this CareEdge Ratings report marks one of the more significant changes in the country's residential market in recent years. With affordable homes falling from 85 percent to 47 percent of new launches since 2022, and premium premium housing launches filling that gap, the affordable housing decline is reshaping what buyers will find on offer in India's top cities going forward.
