Whalesbook
### Market Stabilization Expected by 2028
India's residential property market is set to stabilize in terms of affordability between 2026 and 2028. This shift is expected as household incomes grow faster than home prices for the first time since 2021. According to CBRE's India Residential Market Outlook 2026, this trend points to a lighter financial load for homebuyers in major cities. Analysis of the EMI-to-income ratio shows a move away from the rising figures seen between 2021 and 2024. Those increases were made worse by Reserve Bank of India interest rate hikes and fast home price rises. Lower interest rates, moderating price growth, and higher disposable incomes are expected to help affordability across different income groups.
### Premium Segment Sees Strong Growth
The premium and luxury housing markets are showing strong growth, making up a large part of current activity. In 2025, both new home launches and sales exceeded 270,000 units. The high-end category accounted for about 27% of total sales, selling more than the mid-market segment for the first time. Sales in these premium areas grew over 30% year-on-year. New supply also increased significantly by 38%, adding around 52,000 luxury units. Even though overall sales volumes dipped by 8%, the total sales value rose by about 15%. This indicates a clear shift towards more expensive, higher-quality homes, supported by growing wealth among high-net-worth individuals—a trend seen in many real estate forecasts.
### Affordable Housing Faces Ongoing Challenges
Meanwhile, the affordable housing segment, targeting homes under ₹45 lakh, continues to face major hurdles. Higher costs for construction materials and the removal of specific government support have put this sector under strain, slowing growth and reducing its market share. CBRE's report stresses the need for policy adjustments. Suggestions include changing limits on prices and property sizes, and bringing back support for builders and buyers. These moves could help the segment regain its pre-pandemic market share of 25-30% and potentially lead to about 60,000 new homes built annually. Analysts note that developers focused on affordable housing are dealing with lower profit margins and slower sales compared to those in the premium markets.
### A Market Divided by Income
The expected stabilization of affordability between 2026 and 2028 is not a uniform improvement for all. It highlights a market increasingly divided by income and wealth. Households earning around ₹40 lakh annually can expect homes in the ₹1.25–2 crore range to become more accessible. Those earning ₹75 lakh may find 3BHK homes becoming more attainable. Meanwhile, households earning ₹1 crore should see their EMI payments for premium housing decrease. However, this gradual improvement for some happens alongside the ongoing problems in the affordable segment. Past data shows that while income growth faster than prices can improve local affordability, lasting positive changes, especially for lower-income groups, require steady support. India's projected GDP growth offers a positive economic backdrop, but economic uncertainties and inflation abroad could still dampen market confidence and investment across all segments.