Luxury v/s Affordable Housing: Key Trends That Defined Real Estate In 2024

The real estate sector has seen many changes in 2024 which can be understood with the growth of two extremes; luxury housing which has risen to new heights and affordable homes which are struggling to find their footing.

As the realty sector navigated some recent spikes in housing prices, consumer preferences have also seen a shift. On an annual basis, housing prices rose anywhere between 13-39 per cent across the top 7 cities, primarily due to increased input costs and strong homebuyer demand. Further, the average ticket size of homes sold in these cities was Rs 1.23 crore in H1 FY 2025, against Rs 1 crore or less in the corresponding period of FY 2024.

Luxury v/s Affordable Housing: What was the mood of homebuyers this year?

An analysis of housing trends reveals that luxury real estate saw extraordinary growth this year, primarily driven by consumer demand for ‘premium properties’. According to ANAROCK data, Delhi NCR saw the highest average ticket size growth at 56 per cent from Rs 93 lakh to Rs 1.45 crore. Bengaluru, Hyderabad, and Chennai also followed closely behind with average ticket size growing by 44 per cent, 37 per cent and 32 per cent, respectively.

Here’s how the prices spike across top 5 cities (other than NCR and Mumbai) in H1FY25 as compared to H1FY24

Bangalore: From Rs 84 lakh prices rose to Rs 1.21 crore

Hyderabad: From Rs 84 lakh prices rose to Rs 1.15 crore

Chennai: From Rs 72 lakh prices rose to Rs 95 lakh

Pune: From Rs 66 lakh prices rose to Rs 85 lakh

Kolkata: From Rs 53 lakh prices rose to Rs 61 lakh

Despite a 3 per cent dip in overall unit sales in H1 FY2025, overall sales value exceeded that of last year (at 18%) with luxury homes taking up major space. This shows how the affluent buyer’s appetite for upscale homes remains unfazed.

The ANAROCK-FICCI Homebuyer Sentiment Survey revealed that even while the budget range Rs 45 lakh to Rs 90 lakh remained the most preferred budget for over 35 per cent of prospective homebuyers, premium and luxury homes gained significant traction. At least 45 per cent of homebuyers today prefer to buy homes priced above Rs 90 lakh.

According to Ram Naik, co-founder and director, The Guardians Real Estate Advisory, “The demand for luxury real estate was much larger in 2024 than for more reasonably priced residences.”

Naik notes, “Up to October of the current fiscal year, premium homes sold 22 per cent more frequently year-on-year in Bengaluru, Delhi-NCR, and Mumbai, according to research. The need for affordable housing, however, only mandated the provision of a mere 7 per cent increment throughout that period.”

Trends in luxury real estate include size, modern features, and moderate increases in the ability of high-end consumers to buy more attractive properties. “However, either extremely expensive lending facilities or the sharp increase in real estate prices (about 9 per cent annually) had a significant impact on affordability,” Naik states.

What is the catch of luxury homes?

Says Manoj Gaur, CMD of Gaurs Group and Chairman of CREDAI National, “We have seen that major metro and mini metro markets are increasingly moving towards bigger homes with luxury specifications that enhance the lifestyle of a family. Homes are no longer seen as mere dwelling units but as personal statements, expressions of identity, ambition, and a desire for enduring value. Luxury homes have evolved from being symbols of opulence to spaces that resonate with buyers' journeys, aspirations, and status.”

Real estate developers, in turn, redefined their approach to meet these evolving expectations.

Sharing the same thought, Rajjath Goel, Managing Director, MRG Group notes that trends like branded residences, mixed-use developments, and larger homes have contributed to luxury housing becoming ‘the choice’ for homebuyers. He further notes, “Infrastructure projects like Noida Airport, Dwarka Expressway, metro connectivity, and other big-ticket announcements turned NCR into a luxury hotspot for high-end buyers. Meanwhile, affordable housing faced headwinds from rising costs and land scarcity .”

Affordable Housing, An Unfulfilled Promise

Where the luxury segment boomed, affordable housing laggard. Demand in this critical segment has been waning since the pandemic, an ANANROCK report states and 2024 was no exception. The survey revealed that 53 per cent of affordable homebuyers were dissatisfied with the options available to them in the current market.

Challenges such as limited inventory, subpar quality, and inadequate amenities have left the affordable housing segment’s target audience disillusioned.

Adding to the woes, the share of affordable housing in new launches plummeted to just 17 per cent by September 2024, compared to 40 per cent pre-pandemic. Developers, it seems, are shifting their focus to mid and premium segments where margins are higher.

“Bigger homes continue to dominate buyer preferences despite spiraling prices,” says Chairman - ANAROCK Group, noting that over 51 per cent of survey respondents now favor 3BHKs, while only 39 per cent are willing to settle for 2BHK options

Says Samir Jasuja, founder and CEO, of PropEquity, an online real estate data and analytics platform, “Affordable and mid-income housing has seen a gradual decline in demand owing to limited supply as developers are focusing on luxury projects. Profitability is low in affordable housing due to a rise in construction costs and low-profit margins.”

Will Affordable Housing see the light of day?

Says Bhavik Bhandari, CSMO, Ashwin Sheth Group, “In India, the demand for luxury housing has surpassed that of affordable housing, driven by rising incomes, lifestyle changes, urbanisation, infrastructure development, strong economic growth, and an increasing number of high-net-worth individuals (HNIs).”

However, he notes, “affordable housing has also seen a pronounced demand, fueled by factors such as urban migration, government initiatives, and growing homeownership aspirations among the middle-income segment. While luxury housing remains steady, attracting affluent buyers seeking exclusivity and advanced amenities, affordability and accessibility will continue to drive the demand for affordable housing.”

Peripheral Areas Steal the Spotlight!

Another fascinating trend of 2024 was the rise of peripheral areas around the top 7 cities that saw housing prices surge way past their prime centers.

As prime areas became increasingly unaffordable, many homebuyers flocked to suburban and peripheral regions lured by both better value for money and improved connectivity. Bengaluru’s Gunjur for instance saw its prices jump by 69 per cent over six years while NCR’s Noida Expressway and Dwarka Expressway recorded a price surge of 66 and 93 per cent respectively.

Developers are now capitalising on available land in such peripheries by building state-of-the-art societies with abundant green spaces, a feature that has become a major selling point in the post-Covid era.

Tier II Cities Saw Record Price Hike

While metro cities continued to dominate the realty infra, Tier II cities became the growth engine for prime housing. The data by PropEquity showed that prices in weighted cities like Jaipur, Gandhi Nagar, and Bhubaneshwar rose by as much as 65 per cent between 2023 and October 2024.

According to Jasuja, this surge is a mix of affordable land, improved infrastructure, and growing demand from investors and corporates. "Tier-II cities are becoming employment hubs, and with that, the demand for premium and luxury housing has surged," he states.

The Market of Contrasts

The year-round reports on the real estate sector reveal that the market is divided. Where luxury housing continues to overshadow the affordable housing segment with record-breaking sales and demands, affordable housing is still looking to find its momentum.

As we step into 2025, the question looms heavily; Will we see any boost in affordable housing or the market’s focus will continue to tilt toward the high-end segment?

Notes Bhandari, luxury and ultra-luxury housing in India is expected to grow faster than affordable housing, driven by high-net-worth individuals (HNIs) and non-resident Indians (NRIs). Affordable housing, on the other hand, may face challenges due to cost pressures and concerns about reduced spending from the middle class due to high inflation.

Experts note that luxury demand looks set to grow stronger in the coming year, while affordable housing desperately needs policy boosts to meet its potential.