India's housing market is undergoing a structural shift towards premium and luxury segments, according to a report by CareEdge Ratings. Despite a moderation in overall housing sales across major cities in Q1 2026, the premium and luxury housing sectors have shown resilience, driven by affluent buyers less affected by inflation and high property prices.
Affordable housing's share of new launches in the top seven cities has decreased significantly, from 85% in Q1 2022 to 47% in Q1 2026. In contrast, the Rs 1.5-4 crore segment increased its share from 14% in Q1 2022 to 44% in Q1 2026. The luxury segment, with homes priced above Rs 4 crore, expanded from 1% in Q1 2022 to 9% in Q1 2026. This trend reflects developers' focus on mid-premium and luxury housing due to rising land acquisition, construction, and compliance costs.
Residential developers have strengthened their balance sheets, with the debt-to-collections ratio falling from 1.80 times in FY20 to 0.68 times in FY26. Collections from sizeable launches exceeded Rs 90,000 crore, while bookings surpassed Rs 1.5 lakh crore in FY26. However, smaller developers may face challenges due to weaker financial positions.
“We are witnessing a clear structural shift in the profile of ultra-luxury homebuyers.”
Pratik Tibrewala, SVP & Head Corporate Finance, M3M India
City-wise, housing sales showed divergence, with declines in Pune, Delhi-NCR, and MMR, while southern cities like Chennai, Bengaluru, and Hyderabad recorded growth. This divergence highlights the differing dynamics across regions, with southern markets benefiting from steady end-user demand and new project activity.
Background
The shift towards premium and luxury housing is indicative of broader wealth creation trends in India. As developers adapt to changing buyer preferences and rising costs, the market is becoming increasingly segmented.
As the market evolves, stakeholders should monitor how these changes impact affordability and the availability of housing across different segments.
