This City Doesn’t Sell Homes to the Middle Class!

—Surya Prakash Josyula

A big city gives you a job, a salary, the Metro, flyovers, shopping malls, and even fancy cafés where you can spend your weekends. But there is one thing it may not give you: a home.

Modern Indian cities are no longer pushing out only the poor. Slowly and politely, they are also pushing out the middle class. Nobody comes to your door and says, “Please leave.” That would be rude. Instead, the city politely tells you, “Sorry. There is no home here that fits your budget.”

And the numbers prove the point. According to recent housing data, homes priced below Rs 40 lakh now account for only 6 percent of new housing supply in India’s major cities. Yes, just 6 percent. The other 94 percent of homes may be empty, and some may not even find buyers. But that does not mean they are affordable for the middle class.

To put it simply, the middle class may have the ability to buy a home, but there are fewer and fewer homes being built for their budget. And that is one of the most interesting things happening in Indian real estate today. Developers seem to be politely giving the middle class some advice: “Want to buy a home? Of course. Just upgrade your income first.”

Where Did the Middle Class Go?

In 2022, around 85 percent of new homes launched in India’s top seven cities were priced below Rs 1.5 crore. In other words, the middle class was still an important customer for developers. By 2026, however, that share had fallen to just 47 percent.

At the same time, homes priced between Rs 1.5 crore and Rs 4 crore increased from 14 percent to 44 percent of new launches. Homes costing more than Rs 4 crore increased from just 1 percent to 9 percent. So, the real estate market appears to have discovered a brilliant solution: if the middle class cannot afford homes, why build homes for them?

From a business point of view, it makes perfect sense. The middle class may not agree.

And honestly, you cannot completely blame developers. There are people willing to spend Rs 3 crore on a home, and there are people willing to spend Rs 4 crore too. Startup founders, first-generation entrepreneurs, senior company executives, highly paid professionals, global Indians, and NRIs all want premium homes. Developers are simply following the money. That is how business works.

Home Sales Fell. So Naturally, Prices Went Up!

Now comes the interesting part. During the second quarter of 2026, home sales in India’s major cities fell by around 6 percent. Normally, when something sells less, prices come down. But real estate is a slightly different universe.

Home sales fell, but new housing launches increased by around 6 to 7 percent. And prices? Prices went up by another 7 percent.

So the buyer says, “Prices are too high. Maybe I should wait.” The market replies, “Sure. Please wait. We will increase the price while you are waiting.”

That too, apparently, is a business strategy.

Buyers Are Thinking. Developers Are Building Towers

The homebuyer is now thinking very carefully. “Should I buy now? Should I wait for a few months? What will happen to my job? What will AI do to the job market? What will happen to the economy?” There are many questions.

While the buyer is thinking, the developer is thinking too. “We bought the land. We got the approvals. We started construction. Stopping now will cost money.”

So both sides are busy thinking. One person is thinking about EMI. The other is thinking about ROI. Meanwhile, more homes are being built.

Homes Are Not Selling. But There Are Plenty of Homes

Available housing inventory has increased by around 10 percent and reached approximately 6.16 lakh homes. Naturally, an ordinary person might ask, “If so many homes are available, can’t you give me just one within my budget?”

Unfortunately, that is where things become complicated. Just because homes are not selling does not mean developers want to reduce prices and take a loss.

So we have a strange new kind of shortage. There are homes, but there are no homes for the middle-class budget.

Take Hyderabad, for example. New projects are coming up, land prices are increasing, apartment towers are rising, and premium projects are everywhere. There are also plenty of unsold homes. But walk into a sales office with a budget of Rs 40 or Rs 50 lakh and ask, “Do you have a new 2BHK?” That conversation may become uncomfortable very quickly.

Finally, Here Is the Real Story

Cities are growing, but the middle class is moving out. This may be one of the most interesting changes happening in Indian real estate. Jobs are increasing, companies are coming, Metro lines are expanding, flyovers are being built, IT parks are growing, shopping malls are opening, and new apartment towers are everywhere.

Everything is coming to the city. There is only one thing becoming difficult: the people who work in the city can no longer afford to buy a home in the same city.

But don’t worry. The city has a solution. Can’t afford a home in the city? No problem. Buy one outside the city.

Your office will still be in the city. Your children’s school will still be in the city. But your home may be 40 kilometres away.

This, apparently, is also a form of urban planning.

So yes, the middle class may finally own a home. The only problem is that by the time they reach home every evening, it may already be night.

So that is where Indian real estate seems to be heading.

Cities need homes. But homes, however, may not need the middle class anymore.