India's residential real estate market has undergone a dramatic structural shift, with premium homes now commanding the majority of new housing supply across the country's top cities, according to a CareEdge Ratings report released on Wednesday, 26 August 2026. Homes priced above ₹1.5 crore accounted for 53% of new launches in Q1 2026, a near-reversal from just four years ago when affordable housing dominated the market.

The Supply Shift in Numbers

In Q1 2022, homes priced below ₹1.5 crore represented 85% of new launches across the top seven cities. By Q1 2025, that share had fallen to 57%, and by Q1 2026, it stood at just 47%.

The ₹1.5 crore–₹4 crore mid-premium segment expanded sharply — from 14% of new launches in Q1 2022 to 34% by Q1 2025, and further to 44% by Q1 2026. Homes priced above ₹4 crore rose from a marginal 1% to 9% of new launches over the same period.

Why Developers Are Pivoting to Premium

'This shift reflects developers' increasing focus on mid-premium and luxury housing, driven by customer preferences and rising land acquisition, construction and compliance costs that have impacted the viability of affordable housing projects,' said Rajashree Murkute, Senior Director, CareEdge Ratings.

Murkute added that sustained demand from affluent domestic buyers and NRIs, coupled with a preference for larger homes with premium amenities, has encouraged developers to allocate a greater share of new supply toward the luxury and ultra-luxury segments. This comes amid a broader post-pandemic recalibration of housing preferences, where space and lifestyle features have overtaken price-per-square-foot as the primary purchase driver for a growing segment of buyers.

Developer Balance Sheets Strengthen

The CareEdge report noted that Indian residential developers are better positioned to navigate ongoing geopolitical uncertainty, citing healthier financial discipline across leading players. The debt-to-collections ratio declined sharply from 1.80 times in FY20 to 0.68 times in FY26, reflecting sustained deleveraging.

Collections from sizeable launches rose to over ₹90,000 crore, while bookings exceeded ₹1.5 lakh crore in FY26 — figures that underscore the demand resilience even as the supply mix tilts upmarket. Fundraising-led deleveraging and stronger collections have together reinforced balance sheet stability across the sector.

City-Wise Sales: South Holds, North Slows

Housing sales trends remained divergent across the top eight cities in Q1 2026. Sales declined by 11% in Pune and Delhi-NCR and by 7% in the Mumbai Metropolitan Region (MMR), reflecting affordability pressures after sustained price appreciation, a normalisation following a strong multi-year upcycle, and cautious buyer sentiment amid geopolitical and financial-market uncertainty.

Southern markets proved comparatively resilient. Sales rose 9% in Chennai, 5% in Bengaluru, and 1% in Hyderabad, supported by steady end-user demand, employment-linked housing requirements, and new project activity. Notably, this north-south divergence mirrors a broader pattern in which tech-sector employment hubs have sustained residential demand even during periods of macro uncertainty.

What This Means for Affordable Housing

The rapid retreat of sub-₹1.5 crore launches — from 85% to 47% of supply in just four years — raises questions about access for first-time and lower-income buyers. As developers chase higher margins in the premium segment, the pipeline for genuinely affordable units is thinning precisely when urban housing demand from middle-income households remains substantial. Whether policy intervention can reverse this trend will be a key question for the sector in the coming years.