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US tariffs threaten to derail India's affordable housing market recovery
Prashant Thakur, Executive Director – Research and Advisory, Anarock, said, 'This category of homes, priced at Rs 45 lakh or less, was already gravely hit by the Covid-19 pandemic and is still struggling to find any semblance of firm ground. Trump's mercenary tariffs will snuff out even the dimmest ray of hope for this segment.'
India's affordable housing segment is largely driven by demand from micro, small and medium enterprises (MSMEs) and small and medium enterprises (SMEs), which, despite their modest scale, are deeply embedded in the export ecosystem. Their workforces form the primary customer base for this category.
Anarock data show that by the first half of 2025, affordable housing's sales share had fallen to just 18 per cent — around 34,565 units out of 1.90 lakh sold across the top seven cities — compared to over 38 per cent in 2019. This underlines a steep loss of momentum. Serving roughly 17.76 per cent of India's 1.46 billion population, the segment's post-pandemic demand slump is mirrored in supply, with its share of new launches plunging from 40 per cent in 2019 to only 12 per cent in the first half of 2025.
MSMEs, a cornerstone of India's economy, are among the largest generators of employment and exports. Government estimates indicate they contribute nearly 30 per cent to gross domestic product (GDP) and over 45 per cent to exports.
In exports, MSMEs have grown 228 per cent in just the past four years — from 52,849 in FY21 to 173,350 in FY25. Together, MSMEs and SMEs formally and informally employ over 260 million Indians, particularly in labour-intensive industries such as textiles, engineering goods, auto components, gems and jewellery, and food processing.
'Because of the disruption in this large workforce's future income due to the tariffs, affordable housing demand may very possibly derail and further impact sales in this highly income-sensitive segment,' said Thakur. 'Concurrently, such a drop in demand will curtail launches by developers, who will have to contend with tighter working capital due to lower sales. As it is, they have been grappling with serious input cost inflation since the pandemic.'
Anarock further noted that housing finance institutions face rising risks from potential defaults to reduced disbursements amid falling demand, leaving the future of affordable housing dependent on urgent government action through coordinated policy, fiscal safeguards, and targeted buyer support.
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