'₹25 lakh salary can’t buy a 2BHK': Real estate advisor asks if India is just building inequality

India’s housing market is pulling apart at the seams. Sales of homes under ₹1 crore are falling, luxury home sales are surging, and the middle class is being priced out of urban homeownership, raising questions about who the country is really building for.

In Q1 2025, sales of homes priced below ₹50 lakh dropped 9%, while ₹50 lakh–₹1 crore sales fell 6%, according to industry data. At the same time, homes priced between ₹2 crore and ₹5 crore saw a 28% rise, and those priced above ₹50 crore surged 483%. Homes costing over ₹1 crore now make up 46% of all residential sales in India’s major metros.

Real estate developer Rajdeep Chauhan, responding to these figures, wrote: “When a software engineer making ₹25L can’t afford a 2BHK in Mumbai, Bengaluru, or NCR, are we building houses or building inequality?” He described the current trend as a shift toward a “barbell economy,” where developers increasingly serve only the very rich or the poor, while the middle is left with shrinking options.

Supporting data points to a structural shift in both supply and affordability. New launches in the sub-₹50 lakh segment have fallen 31% nationwide in H1 2025. In Bengaluru, they’re down 85% from 2018 levels. Mumbai and Kolkata saw year-on-year declines of 11% and 67% respectively.

Affordability metrics are under pressure. The price-to-income ratio in Mumbai has reached 15.1—three times the standard threshold of 5. Incomes aren’t keeping pace with housing prices, and EMI-to-income ratios now stand at 48% in Mumbai, and above 30% in several other metros—levels typically considered financially stressful.

The Reserve Bank of India’s recent 50 basis point rate cut has done little to shift the balance. With high property prices and falling supply in affordable brackets, the middle class remains priced out, even as premium buyers dominate the market.