Dr. Prashant Thakur, executive Director-Research & Advisory at Anarock Group, warns that affordable houses priced on Inr 45 Lakh or already had difficulty recovering from the aftermath of the COVID-19 Pandemie. The new rates imposed under the Trump administration even risk extinguishing the weakest hope of revival for this segment.
Affordable home sales is falling
Affordable homes in India is mainly powered by the demand of the workforce of micro, small and medium-sized companies (MSMEs) and small and medium-sized companies (SMEs). These companies are deeply intertwined in the India export eco system and form the backbone of the economy. However, Anarock data shows that in the first half of 2025 the share of the affordable housing segment of the total home sales in the seven best cities in India fell dramatically to only 18%. This is a grim decrease in the 38% share that was recorded in 2019. To put it in perspective, of around 1.9 Lakh units that are sold in H1 2025, only about 34,565 units belonged to the affordable category. In addition, new launches in this segment have shrunk from 40% in 2019 to only 12% in the first half of 2025.
MSMES: The economic backbone in danger
MSMEs contribute almost 30% of GDP from India and account for more than 45% of the country’s exports. The sector has shown remarkable growth, with exports increasing by 228% of 52,849 in FY 2020-21 to 173,350 in FY 2024-25 in the past four years. Together, MSMEs and SMEs have more than 260 million Indians employed, formal and informal, in labor-intensive sectors such as textile, engineering, automatic components, gems and jewelry and food processing. This massive staff is the core base for affordable homes. The segment is suitable for almost 17.76% of the Indian population, which is approximately 1.46 billion strong.
Rates threaten growth and demand for homes
Laying rates threatens to stop the otherwise promising opportunities for Indian MSMEs to expand their export footprint, set up global supply chains and diversify income flows. The rates act as a “Chakka Jam” (roadblock) on the economic vehicle that sends affordable dreams of homeowners for millions in groups with lower incomes in India.
Dr. Thakur explains that disruption of the income perspectives for this enormous workforce as a result of rates could derail the demand for affordable homes, which is very sensitive to income changes. This will inevitably affect sales, forcing developers to reduce new launches in the midst of working capital conditions and the continuous inflation of input costs since the pandemic.
Financial risks for housing financing companies
Housing financing companies (HFCs) that mainly ensure affordable buyers of homes with growing risks. The potential for increased standard values of the loan looms great if demand continues to fall, while the lower sale will also reduce new loans, so that the liquidity in the sector is further tightened.
The way for us
The affordable living sector of India is at a critical intersection. Its future strongly depends on timely government intervention due to coordinated policy measures, tax guarantees and copper -oriented support. As soon as the flagship of India’s housing vision and an important engine of financial stability for millions, affordable homes are now in balance.
Unless these challenges are entered into with strategic solutions, the dreams of homeowner for millions in India’s MSME staff could become another victim of global trade stresses.
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