For many middle-class homebuyers in India's bustling urban centers, the dream of owning a home for ₹1 crore or less has shifted dramatically. What was once considered a luxury budget is now fast becoming the baseline entry price for a modest apartment, creating an unprecedented affordability challenge.
The Shifting Landscape of Urban Housing Costs
Data from NoBroker reveals a stark reality: average residential prices have climbed to approximately ₹10,450 per square foot. At this rate, a standard 1,000-square-foot apartment now commands around ₹1.05 crore, and that's before accounting for additional costs like stamp duty, registration fees, and interior fit-outs. Even smaller configurations, such as 800-square-foot or 900-square-foot homes, are increasingly scarce in several major urban markets, pushing buyers towards higher price points.
Developers Prioritize Larger, Premium Units
This affordability crunch is exacerbated by a significant mismatch between buyer demand and the new housing supply. In key cities like Bengaluru, Hyderabad, and Chennai, about 68% of new housing projects consist of 3BHK (three-bedroom, hall, kitchen) apartments or larger. This is despite a concentrated demand for more modest 1BHK and 2BHK properties.
Hyderabad exemplifies this disparity, where smaller homes constitute only 5% of new launches, yet account for 43% of the overall housing demand. Developers are increasingly focusing on larger units, often marketed as premium properties, to achieve higher ticket prices and cater to affluent buyers seeking additional space, dedicated home offices, and lifestyle amenities.
Ashish Narain Agarwal, founder and managing director of PropertyPistol, noted, "The buyer preferences are shifting towards larger homes, driven by the need for dedicated work and lifestyle spaces, while developers are increasingly prioritising premium, amenity-led projects with higher ticket sizes. This points to a clear preference for better locations, amenities, flexible living spaces and lifestyle-led communities."
Modest Demand Growth, Continued Price Hikes
The push towards more expensive, larger homes occurs amidst relatively subdued overall housing demand growth. Across six major Indian markets, demand increased by only 3% year-on-year in the second quarter of 2026. While Chennai saw a 10% rise and Pune a 9% increase, cities like Hyderabad and the National Capital Region (NCR) experienced declines in demand.
Despite these demand fluctuations, prices have continued their upward trajectory. Bengaluru recorded a 16% price growth, Chennai 14%, and notably, NCR prices increased by 13% even as demand fell by 10%.
Tough Choices for Middle-Class Buyers
Pune stands out as a relative exception, with 2BHK homes making up 47% of its new supply. The Mumbai Metropolitan Region also maintains a comparatively larger share of smaller homes, largely due to ongoing redevelopment projects. However, for most middle-class families, a ₹1 crore budget now presents difficult choices: opt for a smaller home closer to employment hubs, settle for a larger apartment further from the city center, or commit to a significantly higher home loan and EMI burden.
Agarwal issued a caution, stating that "if average ticket sizes rise faster than incomes, the market risks creating a widening gap between what buyers aspire to own and what they can comfortably afford." He emphasized the need for more efficient, well-connected housing across various price points to ensure India's real estate growth remains both aspirational and inclusive. For households earning ₹60,000-₹80,000 a month, managing such a ticket size without a substantial down payment becomes a formidable financial challenge.