Beyond Premiumisation: Can India’s Housing Market Balance Rising Property Values with Affordability?
by Abhishek Jain, COO, Group Satellite
India’s residential real estate sector is putting forward a pattern that deserves closer scrutiny than it has so far received: aggregate market health is strengthening even as the base of participating buyers appears to be narrowing. This is not a contradiction in the data. It is the defining feature of the current cycle, and it has direct implications for how the industry should think about its next phase of growth. The trend is visible in the numbers. Housing sales across India’s top seven cities rose 9% year-to-year in the first quarter of 2026, to approximately 1.02 lakh units, with sales value up 6% to ₹1.51 lakh crore. By the second quarter, sales declined 6% year-to-year to roughly 90,715 units, an 11% fall from the previous quarter, even as new launches increased by 7%. Only three of the seven cities registered any sales growth at all. Unsold inventory across these cities rose 10% year-on-year, crossing 6.16 lakh units. The growth that did occur was concentrated primarily in premium housing, employment hubs tied to global capability centres, and infrastructure-driven corridors segments that do not represent the bulk of India’s urban housing demand.
This pattern is consistent with full-year 2025 figures, which showed sales volumes falling 14% even as sales value still rose 6%, crossing ₹6 lakh crore for the year. The Mumbai Metropolitan Region recorded one of the steepest declines of any major market, with sales down 18% for the year. Taken together, these figures point to a market generating stronger revenue from a shrinking and more concentrated buyer base, rather than one expanding on genuinely broader participation.
The affordability implications of this shift are most visible in Mumbai. The city’s EMI-to-income ratio stood at 48% in the first half of 2025, the highest among major Indian cities, compared with 18% in the most affordable market tracked. Property values in the Mumbai Metropolitan Region have not eased to close that gap: the region was among the markets that saw prices climb by more than a fifth within a single year in 2024, and that appreciation has continued since, with average residential prices crossing ₹17,780 per square foot by the second quarter of 2026.
The industry’s instinct, in response to this kind of environment, is often to treat premiumisation as a self-explanatory outcome of rising incomes and evolving aspirations. That explanation is only partially sufficient. Rising incomes account for a genuine shift in what a segment of Indian buyers wants and can afford. They do not, on their own, account for a market structure in which sales value can rise while sales volume falls in the same period. That divergence reflects supply-side choices as much as demand-side preference: capital allocated toward the segment showing resilience during a softer quarter is a rational response to short-term conditions, but its cumulative effect, sustained across several cycles, is a gradual narrowing of what gets built for the majority of urban households.
There is, at the same time, a credible basis for a more constructive medium-term outlook. Tracking of EMI-to-income ratios across major cities and income brackets between 2021 and a 2028 projection shows a consistent rise in this ratio through 2024, driven by a rate-tightening cycle and by price appreciation that outpaced income growth through that period. The projection for 2026 to 2028, however, is the first since 2021 to show household income growth outpacing property price appreciation. Should this projection hold, it would represent a genuine structural improvement in affordability conditions rather than a temporary effect of monetary easing.
This projected improvement should be treated as an opportunity to be acted upon, not an outcome to be assumed. Favourable interest rates and rising incomes create the conditions under which affordability can improve, but they do not by themselves correct a supply mix that remains weighted toward higher-value housing. That correction depends on decisions made at the project level: unit sizing, layout efficiency, construction methodology and location strategy. Growth within the Mumbai Metropolitan Region is now originating disproportionately from newer suburban micro-markets rather than established business districts, a shift directly linked to infrastructure expansion. This indicates that connectivity, more than any single pricing decision, is what determines whether a wider segment of buyers can access a market of this kind.
It is also worth noting that the industry’s conventional framing of “affordable” and “premium” as opposing categories understates the segment that matters most for the next phase of growth: buyers prepared to pay more for demonstrable improvements in construction quality, design efficiency and connectivity, but increasingly unwilling to pay a premium not supported by any of these attributes. Developers that treat premium pricing as a function of location or brand alone, rather than of verifiable product quality, are likely to find this segment of demand more discerning than anticipated.
The question posed at the outset whether India’s housing market can balance rising property values with affordability does not have an automatic answer. The data through 2026 shows a market capable of generating strong aggregate value while narrowing its base of active participants. Current projections for 2026 – 2028 offer a genuine window in which income growth may outpace price appreciation for the first time in five years. Whether that window translates into a more broadly accessible housing market will depend on whether developers use it to widen the range of what is built, or simply to consolidate further around the segment that has proven most resilient. That decision, made collectively over the next two years, will determine more about the health of this market than any single quarter’s sales figures.
