Kolkata: India’s affordable housing segment, already struggling since the pandemic, faces fresh headwinds from the United States’ recent imposition of 50 per cent tariffs, with industry experts warning of a sharp demand decline driven by stress on the micro, small and medium enterprises (MSME) sector.
Data from ANAROCK Research & Advisory shows that in the first half of 2025, affordable housing—homes priced at Rs 45 lakh or less—accounted for just 18 per cent of sales in the top seven cities, or around 34,565 units out of 1.90 lakh sold. This marks a steep fall from the 38 per cent share recorded in 2019. Supply has also plunged, with new launches in this segment dropping from 40 per cent of total launches in 2019 to just 12 per cent in H1 2025.
The segment’s primary buyers come from India’s MSME and SME workforce, which employs over 260 million people and contributes nearly 30 per cent to GDP and more than 45 per cent to exports. These sectors—spanning textiles, engineering goods, auto components, gems and jewellery, and food processing—are expected to take the sharpest blow from the tariffs.
Prashant Thakur, executive director, research & advisory, ANAROCK Group, said the tariffs could “snuff out even the dimmest ray of hope” for affordable housing, which was “already gravely hit by the COVID-19 pandemic.” Developers are also grappling with input cost inflation and extended project timelines due to a cumbersome approval process. Sushil Mohta, president, CREDAI West Bengal and chairman, Merlin Group, said: “Due to the time-consuming process of obtaining various approvals and clearances under a plethora of laws, the cost of interest and overheads increases significantly.
The government should take serious steps to further improve ease of doing business… to expedite the approval process.” He added that while tariffs may have a short-term impact on the economy, including housing, he does not expect a long-term effect.
It is being apprehended that housing finance companies catering to this buyer segment may see rising loan defaults or reduced disbursements if demand weakens further, making government intervention critical to stabilising the sector.