Affordable housing now crosses Rs 45 lakh — but govt limit stays unchanged

What was once “affordable” is now harder to find. India’s urban population is running out of affordable homes, and the numbers are getting harder to ignore.India’s urban affordable housing shortage continues to widen, with the deficit currently estimated at 9.4 million units and projected to rise to 30 million by 2030, according to Anarock.It has long been assumed that building more homes will fix the gap; however, recent trends show it is not that simple. The real challenge lies in land availability, location, and whether projects are financially viable.

Supply vs demand: A widening mismatch

According to market data, across the top eight Indian cities, the supply-to-demand ratio for affordable housing has fallen to 0.36 in 2025, down from 1.05 in 2019. Earlier, developers were launching more affordable homes than were being sold.

Now, new launches are down to almost one-third of demand.Industry body CREDAI, representing over 15,000 developers, has also recorded a significant shift in construction priorities. The share of affordable housing in new launches declined from 26% in 2021 to 17% in 2024, indicating reduced participation from the private sector in this segment.

The Rs 45 lakh definition vs market reality

However, while “affordable” housing is moving beyond the Rs 45 lakh range, the government’s limit continues to remain the same.

Under NITI Aayog’s existing definitions, a dwelling unit with a carpet area of up to 60 sq. m in metropolitan cities and 90 sq. m in non-metropolitan areas, and a total value not exceeding Rs 45 lakh, is classified as affordable housing.However, achieving the Rs 45 lakh threshold within major urban centres such as Mumbai or Bengaluru has become increasingly difficult without significant financial balancing mechanisms such as subsidised land, cross-subsidisation from higher-value inventory, or reduced margins that can affect project viability.

The land problem behind affordable housing

A key constraint is the mismatch between where demand for affordable housing is concentrated and where developable land is actually available. Demand remains strongest in urban cores and inner peripheries, while serviced and legally viable land in these areas is increasingly occupied by mid-income and premium housing projects, where returns justify higher land costs.As a result, affordable housing developments are often pushed towards outer peripheral locations, where land prices are lower but access to employment centres, transport connectivity, and social infrastructure is limited.The composition of new housing supply further reflects this shift towards higher-value segments.According to Anarock, in Q1 2026, homes priced above Rs 1.5 crore, covering high-end, luxury, and ultra-luxury categories, accounted for 53% of new launches.The upper mid segment, priced between Rs 80 lakh and Rs 1.5 crore, made up 25%. The lower mid segment, ranging from Rs 40 lakh to Rs 80 lakh, contributed 12%, while the affordable segment, defined as below Rs 40 lakh, accounted for just 10% of total launches.