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The shift comes even as overall housing sales across India’s top cities moderated in the first quarter of 2026, with affordability pressures, elevated property prices and cautious buyer sentiment weighing on demand in several markets. However, premium and luxury housing continued to show resilience, supported by affluent buyers who are relatively less sensitive to inflation and higher property prices. Affordable housing loses share to premium segment According to CareEdge Ratings, homes priced below Rs 1.5 crore accounted for 85% of new launches across the top seven cities in Q1 2022. This share fell to 57% in Q1 2025 and further to just 47% in Q1 2026. At the same time, the Rs 1.5-4 crore segment saw its share rise sharply from 14% in Q1 2022 to 34% in Q1 2025 and 44% in Q1 2026. The luxury segment has also expanded, with homes priced above Rs 4 crore accounting for 9% of new launches in Q1 2026, compared with just 1% in Q1 2022. CareEdge Ratings said the trend reflects developers' growing focus on mid-premium and luxury housing, driven by customer preferences as well as rising land acquisition, construction and compliance costs, which have affected the viability of affordable housing projects. Demand from affluent domestic buyers and NRIs, along with a preference for larger homes and premium amenities, has further encouraged developers to allocate more supply towards luxury and ultra-luxury projects. Developer balance sheets strengthen Despite the uncertain macroeconomic and geopolitical environment, residential developers have entered the current phase with stronger balance sheets, CareEdge Ratings said. The debt-to-collections ratio of Indian residential developers fell from 1.80 times in FY20 to 0.68 times in FY26, indicating sustained deleveraging. While debt levels remained broadly range-bound, collections from sizeable launches rose to more than Rs 90,000 crore, while bookings crossed Rs 1.5 lakh crore in FY26. The improvement in balance sheets provides financially stronger developers with a cushion against potential pressures from higher construction and energy costs, interest-rate volatility, tighter liquidity and near-term uncertainty in housing demand. However, CareEdge Ratings cautioned that small and medium-sized developers could face greater pressure, given their weaker balance sheets, smaller project portfolios and limited financial flexibility to absorb disruptions in demand, material supplies, energy prices and input costs. Housing sales show sharp city-wise divergence The housing market also displayed significant differences across cities during Q1 2026. Sales declined 11% in Pune and Delhi-NCR, while the Mumbai Metropolitan Region (MMR) recorded a 7% decline. CareEdge attributed the weakness to affordability pressures following sustained price appreciation, normalisation after a strong multi-year upcycle and cautious buyer sentiment amid geopolitical and financial-market uncertainty. In contrast, southern markets remained comparatively resilient. Chennai recorded 9% growth in housing sales, followed by Bengaluru at 5% and Hyderabad at 1%. These markets benefited from steady end-user demand, employment-linked housing requirements and new project activity. Kolkata and Ahmedabad also registered moderate growth of 5% and 2%, respectively, helped by comparatively affordable pricing and stable local demand. The CareEdge release highlights this divergence, showing weaker sales momentum in Pune, Delhi-NCR and MMR, while Chennai, Bengaluru, Kolkata and Ahmedabad continued to post growth. Western, northern markets moderate; southern cities remain resilient Overall, the data points to an increasingly divergent residential real estate market. High-priced western and northern markets are showing signs of moderation as affordability constraints emerge, while relatively end-user-driven southern markets continue to register growth. CareEdge Ratings said housing sales across the top seven cities declined by a low single-digit percentage in Q1 2026 compared with Q1 2025. The divergence between segments is particularly notable, with premium and luxury housing remaining resilient while affordable and middle-income housing faces greater pressure from inflation, elevated property prices and affordability constraints. "We are witnessing a clear structural shift in the profile of ultra-luxury homebuyers. While traditional business families continue to remain an important customer segment, today's demand is increasingly being driven by first-generation entrepreneurs, startup founders, CXOs, professionals, global Indians and NRIs, reflecting India's broader wealth creation story," Pratik Tibrewala, SVP & Head Corporate Finance, M3M India told ETMarkets. "We are also seeing a growing segment of affluent homeowners monetising independent houses and older residences in Delhi and Gurgaon and upgrading to modern luxury developments that offer branded residences, world-class amenities, hospitality-led services, enhanced security and a superior community living experience," he said. For the residential real estate sector, the emerging picture is therefore not one of broad-based weakness, but of a market increasingly split between premiumisation-led demand and affordability-constrained segments. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. 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