Today, the affordable housing crisis is not merely a real estate market imbalance. Rather, it is emerging as one of the biggest challenges to the government’s Housing for All mission. Industry statistics reveal the story. Last year launches of homes below INR 50 lakh fell 28% YoY while sales in this segment fell 17%. On the contrary, homes costing one crore plus accounted for over 50% of all housing sales. A Reuter poll puts it at 63% in 2026. In the first half of 2025, affordable housing accounted for just 12% of new launches, down from around 40% in 2019. A Naredco- Knight Frank assessment found that the supply-to-demand ratio for affordable housing in the top eight cities had fallen dramatically, from 1.05 in 2019 to just 0.36 in during the first half of the last year.

Even the government’s supply of affordable homes under PMAY-Urban & PMAY-Gramin also fall short of demand. Under PMAY-Urban and PMAY-U 2.0, 127.68 lakh houses had been sanctioned and 99.07 lakh completed/delivered by July 13, 2026, according to the Ministry of Housing and Urban Affairs. PMAY-U 2.0, launched in September 2024, is designed to support another one crore eligible urban households through beneficiary-led construction, affordable housing partnerships, rental housing and interest subsidy. As of July 2026, 3.11 crore houses had been completed under PMAY-G, against 3.92 crore sanctioned. The government has set an overall target of 4.95 crore rural houses, including two crore additional houses during 2024-29. But these achievements need to be seen against the much larger supply requirement. Knight Frank estimates that India will require additional 22.2 million LIG and EWS homes between now and 2030. and the cumulative affordable housing demand could reach about 30 million units by 2030.

Over the years, it is seen that the subsidy-driven policy approach under PMAY for affordable housing is not serving the desired purpose in view of expensive urban land, high construction costs, development charges, financing costs, GST, infrastructure costs and long approval cycles. PMAY-U 2.0 has attempted to address some of these gaps with an overall investment of ₹10 lakh crore. But the private sector’s participation remains inadequate as the risk-return equation does not work in many urban markets. Developers can earn substantially higher margins by building ₹1.5 crore or ₹3 crore homes than by building an affordable home costing below INR 50 lakh. Affordable housing also requires high volumes, faster sales, inexpensive land and tight cost control. Any delay in approvals or increase in construction costs can wipe out already-thin margins, especially as construction costs have risen sharply since the pandemic. 

Over the years, it is seen that the subsidy-driven policy approach under PMAY for affordable housing is not serving the desired purpose in view of expensive urban land, high construction costs, development charges, financing costs, GST, infrastructure costs and long approval cycles. PMAY-U 2.0 has attempted to address some of these gaps with an overall investment of ₹10 lakh crore. But the private sector’s participation remains inadequate as the risk-return equation does not work in many urban markets. Developers can earn substantially higher margins by building ₹1.5 crore or ₹3 crore homes than by building an affordable home costing below INR 50 lakh. Affordable housing also requires high volumes, faster sales, inexpensive land and tight cost control. Any delay in approvals or increase in construction costs can wipe out already-thin margins, especially as construction costs have risen sharply since the pandemic. 

The long-term solution to the affordable housing lies in moving from a subsidy-centric model to a land-and-incentive-led affordable housing ecosystem. As land is the major component of housing cost in many cities. the central government and the state governments need to unlock well -connected large parcels of under-utilised public-sector and institutional land for affordable housing through transparent PPP models, besides providing long-term affordable construction finance. Further, states need to rationalise FSI/FAR, development charges, premiums and approval processes for affordable projects. Higher density around mass-transit corridors can make projects commercially viable while simultaneously advancing transit-oriented development. The price threshold of affordable homes is required to be periodically revised to make them a viable business proposition for developers.

Today, we must realize that India’s housing challenge is no longer simply about building more houses, rather it is about building right houses in the right places and at right prices people can afford. The ₹67 trillion affordable housing opportunity is therefore not merely a market opportunity. It is a national development opportunity. If India wants to turn the promise of Housing for All into a reality by 2030, affordable housing cannot remain the poor cousin of luxury real estate. It must become a core national infrastructure priority and a commercially viable asset class for private developers so that masses can afford a decent home.