Premium Homes Dominate India Housing Market in 2025
India’s residential real estate market continues to demonstrate resilience, supported by a stable macroeconomic environment and recent repo rate cuts, according to the H2 2025 report by Knight Frank India.The data shows a clear structural transformation in housing demand, with premium homes priced at Rs 1 crore and above now accounting for 50 percent of total annual residential sales across the country.
In 2025, overall housing sales stood at 3,48,207 units. Within this, sales of homes priced above Rs 1 crore rose 14 percent year on year, reinforcing the growing dominance of the premium segment in India’s property cycle.
Affordable Housing Sees Sharp Demand and Supply Contraction
While the broader market remained stable, the affordable housing segment experienced significant stress.Homes priced under Rs 50 lakh witnessed a 17 percent year on year decline in demand. Supply conditions were even tighter, with new launches in this category falling 28 percent year on year. The Rs 50 lakh to Rs 1 crore segment also saw a 9 percent drop in new launches during 2025.
The report notes that the slowdown is heavily concentrated in the lower-priced categories, resulting in a shrinking footprint of affordable housing sales across India.
This trend was particularly visible in Delhi-NCR, where the tilt toward higher-value homes has been pronounced.
Structural Shift Toward Premiumisation
According to Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, the affordable housing segment is facing pronounced pressures.Demand declined 17 percent year on year, while supply contracted more sharply at 28 percent year on year. This widening gap signals a structural shift in capital allocation and buyer preferences, with both increasingly gravitating toward higher-value properties.
The marked slowdown in fresh affordable launches reflects developers’ growing reluctance to deploy capital in lower-priced projects. Instead, focus has shifted toward premium housing, which is now shaping the current housing cycle.
Unsold Inventory Contracts Amid Supply Crunch
The supply pullback in affordable housing led to a 7 percent contraction in unsold inventory in the sub Rs 50 lakh category.However, this reduction in inventory does not indicate renewed momentum in the segment. Rather, it underscores the impact of limited new supply entering the market, even as the broader residential sector undergoes a significant shift toward premiumisation.
The H2 2025 findings highlight a decisive transition in India’s residential real estate landscape, with premium homes emerging as the primary growth driver while affordable housing faces sustained headwinds.
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