India’s residential real estate market continues to show strong growth, but affordability concerns are becoming more visible. Over the past three years, housing prices across major cities have risen sharply due to post-pandemic demand recovery, infrastructure expansion, and a shift toward premium housing. At the same time, urban salary growth has remained largely in the single-digit range, widening the gap between property prices and household incomes.
According to ANAROCK Research, average residential prices across India’s top seven cities increased from about ₹5,600 per sq. ft. in 2019 to nearly ₹7,550 per sq. ft. by 2024, representing more than 50 per cent growth in five years. Much of this rise occurred in the last two years of the cycle.
In contrast, urban salaries have grown roughly 8-10 per cent annually, creating a widening affordability gap.
This divergence becomes clearer when measured through EMI-to-income ratios, which track how much of a household’s salary goes toward home loan repayments. The Knight Frank Affordability Index shows that affordability improved significantly between 2010 and 2021 due to falling interest rates, but stabilised after the pandemic price surge. By 2025, EMI-to-income ratios stood at about 47 per cent in Mumbai, 28 per cent in Delhi-NCR, 27 per cent in Bengaluru, 23 per cent in Chennai, 22 per cent in Pune and Kolkata, and 18 per cent in Ahmedabad, indicating manageable city averages but rising pressure in certain micro-markets.
The micro-market affordability gap
One of the major changes we have seen in India's housing market since 2020 is the noticeable jump in ticket sizes, not just the price per square foot. More and more buyers are opting for larger homes, like 3BHK and 4BHK configurations, which really reflects a shift in lifestyle and the rise of hybrid work setups. This trend has led to a significant increase in overall acquisition costs, even if the growth in price per square foot seems to be on the moderate side.
Delhi-NCR illustrates this phenomenon particularly well. According to ANAROCK data, average residential prices in the region rose from approximately ₹4,580 per sq. ft. in 2020 to about ₹8,300 per sq. ft. by early 2025, marking a rise of nearly 81 per cent in five years. However, the real affordability pressure is visible at the corridor level.
In Gurgaon (Gurugram), especially along the Dwarka Expressway corridor, residential prices today range roughly between ₹14,000 and ₹18,000 per sq. ft., while prime micro-markets such as Golf Course Road often exceed ₹25,000 per sq. ft., according to JLL and ANAROCK market assessments. A typical premium apartment of about 2,500-2,700 sq. ft. in these locations can therefore command a ticket size approaching ₹3 crore.
For a home loan covering 80 per cent of such a property, the monthly EMI can easily exceed ₹2 lakhs at prevailing mortgage rates. Financial planners typically recommend that housing EMIs remain within 30-40 per cent of monthly income. In practical terms, such purchases require a household income of ₹5-7 lakh per month, effectively shifting these markets toward high-income buyers.
Noida’s role as NCR’s affordability release valve
The pricing pattern in Noida and Greater Noida reflects how affordability pressures within a large metropolitan region tend to push buyers toward outer corridors. According to ANAROCK’s NCR research, residential prices in Noida have risen about 92 per cent since 2020, while Greater Noida recorded nearly 98 per cent growth over the same period.
Despite this rapid appreciation, the region remains relatively more accessible compared to Gurgaon. Prices along the Noida Expressway corridor typically range between ₹8,000 and ₹15,000 per sq. ft., while Noida Extension (Greater Noida West) continues to offer housing between ₹5,500 and ₹8,500 per sq. ft., according to JLL and ANAROCK market reports.
The difference in pricing sheds light on a growing trend among buyers in NCR. Many families that start their home search in the upscale areas of Gurgaon often find themselves moving towards Noida or Greater Noida to stay within their budget. This trend shows that while affordability challenges might not lessen the demand for homes, they do shift where that demand is focused.
Supply economics and the premiumisation cycle
While demand dynamics play a role, supply-side economics have accelerated this affordability shift. According to JLL construction cost studies, development costs in India’s major cities have risen substantially since 2019 due to higher labour costs, elevated raw material prices and regulatory compliance requirements.
For developers, this has fundamentally altered project economics. Affordable housing projects typically generate margins of 10-12 per cent, whereas premium developments can deliver margins closer to 25-30 per cent. Not surprisingly, the share of affordable housing launches has declined sharply in recent years.
ANAROCK data indicates that homes priced below ₹45 lakh, which once accounted for nearly 40 per cent of supply, now represent a much smaller share of new launches across major cities. Instead, developers are increasingly focusing on mid-premium and luxury projects, where margins and demand visibility remain stronger.
What the next phase looks like
None of this suggests that India is entering a housing crisis. The sector today is structurally far healthier than in previous cycles. Regulatory reforms such as RERA, stronger developer balance sheets and disciplined supply have significantly reduced systemic risks. Unsold inventory across the top seven cities remains far below the levels seen a decade ago.
However, the challenge emerging in India’s urban housing market is one of access rather than stability. When property prices grow faster than household incomes, the effective buyer base gradually narrows. Over time, this can push more households toward peripheral markets or longer rental cycles.
Over the next three to five years, residential price growth is likely to moderate while demand becomes more segmented. Premium micro-markets will continue to attract investment due to infrastructure development and high-income employment clusters. At the same time, the real opportunity for developers will lie in creating well-located mid-segment housing that bridges the widening gap between aspiration and affordability.
(The Writer is director of Eros Group, a prominent real estate/hospitality firm in India.)
(The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.)
