Affordable housing stares at another year of subdued demand

THE SALE OF affordable housing units is expected to remain subdued next year too due to low supply and lower buyer interest as interest rates on loans have still not fallen enough.

- RAGHAVENDRA KAMATH

Experts said affordable housing sales can only be propped up through more rate cuts and incentives for developers. Despite cuts in goods and services tax (GST) and interest rates, affordable housing sales fell in 2025 as the benefits were minimal and supply lagged.

The sale of units priced under ₹50 lakh dropped 17% year-on-year in 2025, launches dropped by 28% and the quarters to sell level stood at 8.7 compared with 8.2 in 2024, according to Knight Frank India.

While GST reductions in September 2025 are directionally positive, the overall benefit amounts to roughly just 1% of the final product's value, said Vivek Rathi, national directorresearch, Knight Frank India

"Sales exceed supply/ launch volumes in this segment which is contrary to the overall market where the opposite dynamic exists. This suggests that there might be a lack of viable options in the segment which is contributing to the depressed volumes," Rathi said.