Affordable housing ₹45 lakh price cap ‘not relevant’; CREDAI wants definition based on area, not price
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The Mumbai Metropolitan Region leads India's residential real estate market, capturing 34% of sales value in FY26. Meanwhile, developers are pushing for a policy shift to redefine affordable housing based on unit area rather than the outdated ₹45 lakh price cap.
The Dominance of MMR in India’s Real Estate Landscape
The Indian real estate sector has undergone a massive transformation, with the Mumbai Metropolitan Region (MMR) firmly cementing its position as the country's most valuable residential market. According to the latest data from the CREDAI-ANAROCK report, unveiled at the 24th CREDAI NATCON, MMR commanded a 34% share of the total ₹6.3 lakh crore in residential sales value across India’s top nine cities in FY26. This dominance highlights the persistent demand for housing in financial hubs, even as other major centers like Delhi-NCR (22%) and Bengaluru (15%) maintain significant market footprints.
Scaling the Market: From $120 Billion to $600 Billion
The broader growth trajectory of the Indian real estate sector is nothing short of exponential. The report, Indian Real Estate: Growth Trajectory, Sectoral Outlook and Geopolitical Crosscurrents, notes that the total market size has surged from $120 billion in 2017 to approximately $600 billion in 2025. Furthermore, the value of residential projects currently under construction has reached $430 billion, nearly doubling since 2019. This scale of development underscores a robust pipeline of supply, signaling high investor and consumer confidence in the long-term viability of the Indian housing market.
The Crisis of Definition: The Affordable Housing Dilemma
Despite the impressive sales figures, a significant structural challenge has emerged regarding the definition of 'affordable housing.' CREDAI has formally declared that the government’s current ₹45 lakh price cap—established in 2019—is no longer relevant in the current economic climate. Developers argue that the threshold has failed to keep pace with the systemic rise in land acquisition costs, construction materials, regulatory compliance fees, and tax burdens, which have collectively rendered the production of homes under this price point increasingly unviable.
Redefining Affordability Through Area
To address this supply-side bottleneck, the real estate fraternity is advocating for a paradigm shift in how affordable housing is classified. Instead of relying on a static, inflation-prone price cap, CREDAI proposes that the government define affordable housing based on the unit’s area. This approach would decouple the classification from fluctuating market prices and input costs, potentially allowing developers more flexibility to supply homes that meet the needs of lower-to-middle-income buyers without compromising on project feasibility.
Implications for Future Policy and Supply
As the industry looks toward the next six months, the focus remains on whether policymakers will heed the industry’s call for reform. The disconnect between 2019 price benchmarks and 2026 economic realities has created a supply vacuum, particularly in the entry-level segment. If the government adopts an area-based definition, it could trigger a new wave of project launches designed specifically to qualify for incentives, thereby revitalizing the affordable housing segment and ensuring the market remains inclusive for a wider demographic of homebuyers.
Conclusion: A Market at a Crossroads
In summary, while the sheer value of residential sales in cities like Mumbai demonstrates a thriving luxury and mid-segment market, the industry is grappling with the urgent need for policy modernization. The transition from price-based to area-based affordability criteria is not merely a technical adjustment; it is a vital step in ensuring that the $600 billion real estate sector continues to expand sustainably, bridging the gap between developers' production costs and the aspirations of the common homebuyer.
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