From Budget to Bungalows: Why India's Middle Class is Splurging on Luxury Homes

New Delhi (The Uttam Hindu): The Indian real estate market is going through a major change. While affordable homes were the first choice for the middle class at one time, now the sales of luxury and premium homes have broken all records. In 2024 and 2025, this trend has changed so much that both the demand and supply of affordable homes have fallen drastically, while luxurious bungalows and flats worth crores are being sold indiscriminately. What is the reason behind this change and what does it mean for the common man?

India's middle class is now considering a house not just a necessity, but a symbol of status and better lifestyle. This change has come rapidly especially after the Corona epidemic. Due to spending more time at home in lockdown, people are now preferring facilities like bigger houses, open space, swimming pool, club house and smart home. The increase in the number of double-income families has increased their ability to take a loan jointly, which has enabled them to buy expensive houses.

According to a Knight Frank India report, more than 75,000 homes priced above Rs 1.5 crore were sold in the first half of 2025 itself, which clearly shows this changing trend.

The strategy of real estate developers is also a big reason behind this change. Luxury projects have a profit margin of 20-30% higher than affordable housing. Due to rising land prices and expensive raw materials, it is no longer attractive for developers to build low-budget homes. Anarock Research data shows that while 3.1 lakh affordable homes were sold in 2022, this number fell by 36% to just 1.98 lakh in 2024.

Statistics show that affordable homes are disappearing from the market. According to Anarock, sales of homes priced below Rs 50 lakh fell by a massive 43% in the first half of 2025. Private developers are now reluctant to invest in this segment.

In the last few years, the prices of houses have increased by an average of 11%. Also, the burden of EMI has also increased due to the increase in home loan interest rates. This has directly affected the pockets of the middle class, a large part of whose income is now going towards paying EMI. At the same time, the high income group and NRI investors have been less affected by these increased prices and interest rates, due to which the demand in the luxury segment remains constant.

Experts believe that if the government does not adopt policies like increasing the limit of interest rebate on home loans and giving proper encouragement to affordable housing schemes, then buying a house will remain a dream for the common man and the dominance of the luxury segment in the real estate market will increase even more.