Archive · 19 Aug 2025
India's Soaring Construction Costs Hit Affordable Housing
Imagine building a house, but everything is getting more expensive.
The cost to build houses in India has jumped a lot in the last few years, especially since 2021.
This has made it harder to build affordable homes, with their share dropping sharply.
Things like workers, steel, and cement cost more.
While cement prices recently fell, they are still up significantly over five years.
If the government adds taxes on imported materials, it could make things even worse.
This means fewer people can afford to buy a home.
Construction costs in India have risen by 40% in five years, significantly impacting the housing market.
Affordable housing's share of new launches has plummeted from 40% in 2019 to 12% in H1 2025.
Labor costs have increased by 150% since 2019 and 25% in the last year.
Raw material costs have also climbed, with cement up to 57% and steel nearly 50% since 2019.
Proposed tariffs on imported materials could further increase construction expenses.
- Who
- Homebuyers, developers, and the government are affected by the rise in construction costs.
- What
- Construction costs in India have risen substantially, impacting the affordable housing market.
- When
- Construction costs have risen sharply over the last five years, with a notable increase since 2021 and data is based on H1 2025.
- Where
- Costs are rising across major Indian cities, impacting affordable housing projects.
- Why
- Increased costs of raw materials, labor, and overheads, along with potential import tariffs, are driving up construction expenses and impacting housing affordability.
Developers Perspective
Homebuyers' Perspective
Developer Profitability
Developers Perspective
Small affordable-housing developers face thin margins and are slowing launches or cutting amenities.
Homebuyers' Perspective
Large and luxury-focused developers can absorb hikes due to stronger brands and higher margins.
Impact on Affordability
Developers Perspective
Developers are struggling to maintain affordability due to rising material and labor costs.
Homebuyers' Perspective
Buyers struggle with the increased home prices caused by cost escalation clauses in builder-buyer agreements, reducing access to housing.
- Construction Cost Increase (5 years)
- 40%
- Labor Cost Increase (since 2019)
- 150%
- Affordable Housing Share (2019)
- 40%
- Affordable Housing Share (H1 2025)
- 12%
- Steel Price Increase (since 2019)
- Nearly 50%
- Cement Price Increase (5 years)
- 30-57%
