Affordable Housing Supply Shrinks as Land and Construction Costs Rise

India's affordable housing supply is facing pressure from rising land prices, construction costs and government-related charges, according to discussions at the Network18 Rising Bharat West Edition Summit in Mumbai on October 28.

Industry participants said the combined cost of land, construction, development and statutory charges is making it harder for developers to deliver homes at lower price points. The discussion also highlighted the need to expand rental housing as an alternative for households that cannot afford to purchase a home.

Share of homes below ₹50 lakh declines

The Economic Survey figures cited during the discussion showed that homes priced below ₹50 lakh accounted for 17% of new housing supply across India's eight largest cities in 2025, down from 52% in 2018.

Industry representatives called for measures such as lower development levies, more efficient approvals and a longer-term incentive framework to encourage investment in rental accommodation. They also highlighted the potential role of employers and institutional investors in providing housing for workers and other groups.

Rental housing gains attention

Rental housing, student accommodation, industrial housing and senior living were identified as areas where institutional capital could support additional supply. Industry participants also stressed that affordability should be evaluated alongside commuting costs and access to employment.

Market Perspective

The shrinking share of lower-priced new homes raises concerns about the gap between household budgets and the cost of homeownership. Rental housing can offer an alternative, but its success depends on suitable locations, reliable management and rents aligned with local incomes. Policy changes may improve project viability, yet buyers should compare total ownership costs, connectivity and long-term affordability before making a commitment.