Affordable Housing Supply Shrinks to 12% in H1 2025
Real Estate

Affordable Housing Supply Shrinks to 12% in H1 2025

India’s affordable housing sector is under mounting pressure as construction costs have surged 40 per cent in the last five years (2019–2024), according to the latest ANAROCK Research data. The steep rise has slashed the share of new affordable housing launches to just 12 per cent in H1 2025, down from 40 per cent in 2019, while sales share has plunged from 38 per cent to 18 per cent over the same period.

Escalating Costs Driving the Crisis

Between October 2021 and October 2024, construction costs for Grade A residential projects in tier-1 cities rose from Rs 2,200/sq ft to Rs 2,800/sq ft – a 27 per cent spike in three years alone.

Raw materials: Cement prices fell 15 per cent in the last year but surged 30–57 per cent over five years. Steel dropped marginally (1 per cent) year-on-year but is up significantly since 2019. Copper costs rose 19 per cent in one year and a staggering 91 per cent over five years, with aluminium also showing sharp escalation.
  • Labour: The single biggest driver – costs rose 25 per cent in the last year and a massive 150 per cent since 2019.
  • Other costs: Approvals, compliance, logistics (fuelled by rising fuel prices), and overheads further pushed up budgets.
City-wise estimates for 2025 place construction costs for affordable housing between Rs 1,500–2,500/sq ft, while luxury projects exceed Rs 5,000/sq ft in metros like Mumbai and Delhi NCR.
Impact on Developers & Buyers
  • Property buyers: Even a hike of Rs 500–800/sq ft can raise unit costs by Rs 5–8 lakh, making affordable housing unattainable for price-sensitive households.
  • Developers: Smaller players in the affordable segment face thinner margins, forcing them to scale back launches or compromise on amenities. Larger and luxury developers remain relatively insulated due to stronger margins and brand-driven pricing power.
  • Home prices: Housing prices across categories are rising 9–12 per cent annually, with construction costs a key driver alongside land prices and low inventory.

India’s affordable housing sector is under mounting pressure as construction costs have surged 40 per cent in the last five years (2019–2024), according to the latest ANAROCK Research data. The steep rise has slashed the share of new affordable housing launches to just 12 per cent in H1 2025, down from 40 per cent in 2019, while sales share has plunged from 38 per cent to 18 per cent over the same period.Escalating Costs Driving the CrisisBetween October 2021 and October 2024, construction costs for Grade A residential projects in tier-1 cities rose from Rs 2,200/sq ft to Rs 2,800/sq ft – a 27 per cent spike in three years alone.Raw materials: Cement prices fell 15 per cent in the last year but surged 30–57 per cent over five years. Steel dropped marginally (1 per cent) year-on-year but is up significantly since 2019. Copper costs rose 19 per cent in one year and a staggering 91 per cent over five years, with aluminium also showing sharp escalation.Labour: The single biggest driver – costs rose 25 per cent in the last year and a massive 150 per cent since 2019.Other costs: Approvals, compliance, logistics (fuelled by rising fuel prices), and overheads further pushed up budgets.City-wise estimates for 2025 place construction costs for affordable housing between Rs 1,500–2,500/sq ft, while luxury projects exceed Rs 5,000/sq ft in metros like Mumbai and Delhi NCR.Impact on Developers & BuyersProperty buyers: Even a hike of Rs 500–800/sq ft can raise unit costs by Rs 5–8 lakh, making affordable housing unattainable for price-sensitive households.Developers: Smaller players in the affordable segment face thinner margins, forcing them to scale back launches or compromise on amenities. Larger and luxury developers remain relatively insulated due to stronger margins and brand-driven pricing power.Home prices: Housing prices across categories are rising 9–12 per cent annually, with construction costs a key driver alongside land prices and low inventory.

Related Stories

Gold Stories

Next Story
Infrastructure Urban

Vedanta Metal Bazaar Expands to Global Markets

Vedanta Aluminium has expanded its digital e-commerce platform, Vedanta Metal Bazaar, to international markets, enabling overseas customers to order and purchase aluminium products online.The platform will now be available to buyers across Asia, Europe, Africa and the Americas, providing a digital gateway for export transactions with 24x7 access.In FY26, Vedanta Metal Bazaar processed transactions worth nearly $4.1 billion, or over Rs 380 billion, and fulfilled more than 23,000 orders. The platform is also used regularly by more than 550 MSMEs in India alongside large OEM customers.The export ..

Next Story
Infrastructure Urban

Ramky Infrastructure Q1 FY27 Revenue Rises 24.3%

Ramky Infrastructure Limited reported a 24.3% year-on-year increase in consolidated revenue from operations to Rs 471.2 crore for Q1 FY27, compared with Rs 3.79 billion in the corresponding quarter of FY26.Standalone revenue from operations rose 27.5% YoY to Rs 4.51 billion from Rs 3.54 billion, while total standalone income increased 35% to Rs 5.32 billion.Consolidated profit before tax stood at Rs 540.9 million during the quarter. The company highlighted a sharp sequential improvement compared with a pre-exceptional loss of Rs 190.1 million in Q4 FY26.Two of the three projects awarded during..

Next Story
Technology

LTTS Launches AgenticIQ AI Platform for Engineering

L&T Technology Services (LTTS) has launched AgenticIQ, an end-to-end agentic AI platform designed for engineering and manufacturing organisations.The platform is aimed at helping enterprises move beyond isolated AI pilots by enabling autonomous, multi-agent workflows across engineering, product development, manufacturing, industrial operations and customer experience.AgenticIQ is built on LTTS’ Engineering Intelligence portfolio and converts existing engineering capabilities into specialised, reusable AI agents. Its planning-first architecture is embedded into engineering and production ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement