India’s affordable housing sector still faces challenges. This is true even with recent interest rate cuts and better money flow. The Knight Frank–NAREDCO Q2 2025 Sentiment Index shows this. Premium homes over Rs 1 crore are driving growth. Cheaper housing options struggle with costs and fewer new projects.
The Reserve Bank of India cut rates by 100 basis points this year. This lowered borrowing costs and boosted money in the economy. However, cheaper credit isn’t helping affordable housing much. The Knight Frank–NAREDCO Real Estate Sentiment Index noted this.
The Future Sentiment Score improved in Q2 2025. It rose from 56 to 61. Yet, this optimism is mainly in luxury homes and offices.
Premium Homes Lead, Mid-Market Lags Market outlook is cautiously positive. Many expect similar or more new projects. Growth is mainly from homes costing over Rs 1 crore. This is what the report stated.
In contrast, affordable and mid-price homes are seeing fewer new projects. Builders favor high-value projects. Cities like Bengaluru, Hyderabad, and NCR see strong demand.
Affordability Remains a Key Issue Despite aid, affordability is the main problem. Fewer than 52% expect better sales soon. This is a small rise from 50%. The budget housing market shows slow progress.
Prices are rising in many cities. Bengaluru, NCR, and Chennai saw double-digit growth. Higher prices and slow wage increases hurt first-time buyers. The affordability gap is growing.
Developers and Lenders Favor Premium Developer confidence improved greatly. This optimism comes from luxury homes. It also comes from top office spaces. These offer better returns and easier funding.
Banks and investment firms also favor premium projects. Money is flowing to large, low-risk deals. Affordable housing still faces tight lending rules.
Outlook: Premium Homes Stay Popular The real estate sector is stabilizing. Developers are focusing on quality homes. Money is available and borrowing is cheaper.
Despite rate support, affordable housing struggles. Higher costs push homes out of reach. Builders and lenders prefer premium homes for profits. Policy help like subsidies and lower taxes is needed. Easier loans for buyers and builders are also key.