Trade Wars and Tariffs: The hidden cost on India's affordable housing sector
Dr. Prashant Thakur, Executive Director – Research & Advisory at ANAROCK Group, warns that affordable homes priced at INR 45 lakh or less were already struggling to recover from the aftermath of the COVID-19 pandemic. The new tariffs imposed under the Trump administration risk extinguishing even the faintest hope of revival for this segment.
Productivity Tool
Zero to Hero in Microsoft Excel: Complete Excel guide
By Metla Sudha Sekhar
View Program
Finance
Introduction to Technical Analysis & Candlestick Theory
By Dinesh Nagpal
View Program
Finance
Financial Literacy i e Lets Crack the Billionaire Code
By CA Rahul Gupta
View Program
Digital Marketing
Digital Marketing Masterclass by Neil Patel
By Neil Patel
View Program
Finance
Technical Analysis Demystified- A Complete Guide to Trading
By Kunal Patel
View Program
Productivity Tool
Excel Essentials to Expert: Your Complete Guide
By Study at home
View Program
Artificial Intelligence
AI For Business Professionals Batch 2
By Ansh Mehra
View Program
Affordable Housing Sales Plummet
Affordable housing in India is primarily driven by demand from the workforce employed by Micro, Small, and Medium Enterprises (MSMEs) and Small and Medium Enterprises (SMEs). These enterprises are deeply woven into India's export ecosystem and form the backbone of the economy. However, ANAROCK data reveals that in the first half of 2025, the affordable housing segment's share of total home sales in India's top seven cities fell drastically to just 18%. This is a stark decline from the 38% share recorded in 2019.
To put it into perspective, of approximately 1.9 lakh units sold in H1 2025, only around 34,565 units belonged to the affordable category. Furthermore, new launches in this segment have shrunk from 40% in 2019 to a mere 12% in the first half of 2025.
Live Events
MSMEs: The Economic Backbone at Risk
MSMEs contribute nearly 30% of India's GDP and account for over 45% of the country's exports. The sector has shown remarkable growth, with exports increasing by 228% over the past four years—from 52,849 in FY 2020-21 to 173,350 in FY 2024-25. Together, MSMEs and SMEs employ over 260 million Indians, formally and informally, across labour-intensive sectors such as textiles, engineering, auto components, gems and jewellery, and food processing.
This massive workforce forms the core customer base for affordable housing. The segment caters to nearly 17.76% of India's population, which is about 1.46 billion strong.
Tariffs Threaten Growth and Housing Demand
The imposition of tariffs threatens to put a halt to the otherwise promising opportunities for Indian MSMEs to expand their export footprint, establish global supply chains, and diversify revenue streams. The tariffs act like a 'chakka jam' (roadblock) on the economic vehicle driving affordable homeownership dreams for millions in India's lower-income groups.
Dr. Thakur explains that disruption in income prospects for this vast workforce due to tariffs could derail demand for affordable housing, which is highly sensitive to income changes. This will inevitably impact sales, pushing developers to cut back on new launches amid tightening working capital conditions and ongoing input cost inflation since the pandemic.
Financial Risks for Housing Finance Companies
Housing finance companies (HFCs) that cater predominantly to affordable housing buyers face growing risks. The potential for increased loan defaults looms large if demand continues to fall, while lower sales will also reduce new loan disbursements, further tightening liquidity in the sector.
The Road Ahead
India's affordable housing sector stands at a critical crossroads. Its future depends heavily on timely government intervention through coordinated policy measures, fiscal safeguards, and buyer-centric support. Once the flagship of India's housing vision and a key driver of financial stability for millions, affordable housing now hangs in the balance.
Unless these challenges are met with strategic solutions, the dreams of homeownership for millions in India's MSME workforce could become yet another casualty of global trade tensions.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
16 minutes ago
- Economic Times
In 2019, Rs 50K was gold and now it can't pay rent: CA explains why most are struggling, not 'surviving' in urban cities
Synopsis Chartered Accountant Nitin Kaushik has warned that in 2025, earning less than Rs 50,000 a month in metros like Bengaluru, Mumbai, or Pune means barely covering basic expenses. He says rent alone swallows 40-60% of income, with essentials and lifestyle costs doubling in three years. Bengaluru's prime-area rents have surged up to 100% since 2022. Kaushik estimates singles need Rs 20-30 lakh annually for comfort, families Rs 40-50 lakh. Even Rs 1 lakh earners struggle, prompting his call for upskilling, smart budgeting, and early investment. TIL Creatives Representative AI Image Living in India's largest cities has become a battle to stay afloat. Chartered Accountant Nitin Kaushik says that in 2025, a monthly income below Rs 50,000 in Bengaluru, Mumbai, or Pune means 'barely breaking even' rather than on X, he warned that rents alone consume 40-60% of many urban salaries. Add transport, food, and utilities, and there is little left over. 'Living in a metro today without a strong salary equals financial pressure 24x7,' Kaushik wrote. — Finance_Bareek (@Finance_Bareek) Bengaluru, long considered India's tech capital, has seen one of the sharpest rent hikes. Kaushik pointed out that in prime neighbourhoods, one-bedroom flats that cost around Rs 18,000 a month in early 2022 now exceed Rs 30,000. That is an increase of 70-100%.He linked the rise to several factors — the return to office after COVID, a wave of job relocations, and growing real estate demand from NRIs and investors. Kaushik also highlighted that the price of essentials such as food, energy, and transport has stayed high. Combined with lifestyle spending, this has made metro living nearly twice as expensive as it was just three years ago. For those hoping to live comfortably, Kaushik estimates that in 2025, a single person in Bengaluru would need a CTC of Rs 20-30 lakh a year. For a family with one child, that figure rises to Rs 40-50 lakh, which he says would cover good housing, schooling, leisure, and savings. Kaushik warned that even households earning Rs 1 lakh a month are often stuck living paycheck to paycheck due to lifestyle expenses. His advice is direct: upskill to increase income, manage rent and commuting costs, start investing early, and look beyond headline salaries to focus on take-home pay after adjusting for living summed up the shift bluntly: 'Your Rs 50K/month in 2019 was gold. In 2025, it barely pays rent.'
Time of India
20 minutes ago
- Time of India
Export outreach widened to 50 countries to negate US tariff hit
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India is expanding its export outreach to 50 countries including in West Asia and Africa to reduce reliance on any single market and mitigate the risks of trade disruptions amid the steep 50% tariffs imposed by the 50 countries account for about 90% of India's exports. The ministry of commerce and industry is working product by product to improve India's exports competitiveness, officials said."The idea is to tap top 50 countries and look at each product and the competitors. India must mitigate risks to improve manufacturing and export competitiveness," said an official. This exercise to explore alternative markets is being done with export promotion bodies and is crucial as India's merchandise exports in June were flat at $35.14 week, the US doubled the tariffs on its imports from India to 50% at par with Brazil and the highest on any country in a move marking an escalation of trade tensions between the two the initial 25% duty came into effect last week, the additional 25% is effective August 27. Sectors such as marine products, textiles, leather, gems and jewellery, are expected to be severely hit by the adds to the concern is that competing manufacturing hubs such as Turkey, Vietnam and Thailand face significantly lower tariffs of 15%, 20% and 19% respectively, making Indian products relatively less competitive in the US market."The Indian gem and jewellery sector, in particular, stands to be severely impacted. The US is our single largest market, accounting for over $10 billion in exports-nearly 30% of our industry's total global trade. A blanket tariff of this magnitude is severely devastating for the sector," said Kirit Bhansali, chairman, GJEPCThe government is also working on a strategy to safeguard India's exports from American tariffs. This includes offering tailor-made schemes under the proposed Export Promotion Mission for the affected sectors, diversion of goods to other geographies, and identifying products with less export orders that could be diverted to meet the domestic government was already focusing on 20 countries to increase exports but now 30 more have been included in the also said that the possibility of trade rerouting through low-tariff destinations such as Mexico, Canada, Turkey, UAE, or Oman-undermining the spirit of legitimate trade and impacting transparency, is another concern.
Mint
an hour ago
- Mint
‘90% of India makes less than ₹25,000…': Jay Kotak slams ₹50,000 minimum bank balance rule
ICICI Bank is facing heat after hiking its savings account minimum balance by 5 times, and this time veteran banker Uday Kotak's son Jay Kotak has spoken up against the move. In a post on X without explicitly mentioning the ICICI Bank minimum balance hike, Jay Kotak said 90 per cent of Indians make less than ₹ 25,000 a month. 'Every Indian must access our financial sector. 90% of India makes less than ₹ 25,000 a month. A ₹ 50,000 minimum balance implies a sum equal to ~94% of Indians monthly income is to be left with the bank at all times, else a fee!,' he said. Jay Kotak, who leads Kotak Mahindra Bank's digital banking arm Kotak 811, said digital first is the way to go. 'Implication: physical cost to serve may be high. Digital first is the way. If banks don't do it, fintechs will. Banking should be for all Indians.' The ICICI Bank minimum balance for savings account has been hiked from ₹ 10,000 to ₹ 50,000 for urban accounts. MAB (Minimum Account Balance) for semi-urban locations and rural locations have also been increased five times ₹ ₹ 25,000 and ₹ 10,000, respectively, according to information available on the ICICI Bank website. Non-maintenance of ICICI Bank minimum balance will attract penalty, the bank said. The lender will charge 6 per cent of the shortfall in required MAB, or ₹ 500, whichever is lower, if you stay in an urban area and cannot maintain ₹ 50,000 account balance. The changes are applicable to ICICI Bank savings accounts opened on or after August 1. The minimum balance remains ₹ 5,000 for old customers in rural and semi-urban areas. For old urban customers, the minimum account balance should be maintained at ₹ 10,000. The ICICI Bank minimum balance hike was criticised by many, with social media users calling the move discriminatory and elitist. A user wrote, 'In a country where 23 crore people live below the poverty line, ICICI thinks ₹ 50,000 is a 'minimum'. Masterstroke!' In a letter to the finance secretary, 'Bank Bachao Desh Bachao Manch' termed the private lender's decision as "unjust and regressive". 'This retrograde decision undermines the principle of inclusive banking,' the forum's joint conveners, Biswaranjan Ray and Soumya Datta, claimed.
