Affordable Housing In Mumbai – How Will Union Budget 2025 Impact MMR?

The affordable housing sector in India, once a strong performer in the real estate market, has faced a decline in recent years. However, the Mumbai Metropolitan Region (MMR) remains one of the few areas still showing strong activity, according to a Times Now report. The upcoming Union Budget 2025 is expected to play a vital role in revitalising this important sector.

Affordable Housing

The sector flourished under the Union Government's 'Housing for All' initiative, supported by lower GST rates and tax incentives. By 2018 and 2019, affordable housing accounted for nearly 40 per cent of India's total housing supply. However, the sector now faces numerous challenges, and the Union Budget 2025 is seen as critical for its revival.

Affordable Housing In Mumbai

While other cities such as Bangalore, Hyderabad, and Chennai have witnessed a near-total collapse of affordable housing options, MMR continues to offer significant supply. As of January 2025, around 31 per cent of the upcoming residential projects in MMR are priced below Rs 40 lakh. This offers hope to first-time homebuyers, according to ANAROCK.

MMR's affordable housing sector is thriving due to its diverse housing options, including areas like Thane, Navi Mumbai, Kalyan-Dombivli, and Mira-Bhayandar. Factors such as lower land prices, ongoing infrastructure development, and improved connectivity continue to attract both developers and buyers. However, rising costs and shrinking profit margins are leading developers to focus more on luxury projects, reducing the overall supply of affordable homes.

Pandemic's Impact On Housing Preferences

The COVID-19 pandemic shifted housing preferences. With remote work and online schooling becoming common, many people started seeking larger homes with more amenities, instead of the smaller, budget-friendly homes that were previously in demand. This shift in demand, particularly in MMR, led to a drop in interest for affordable homes, as reported by Mid-Day.

Additionally, many of the primary buyers of affordable housing-blue-collar workers and those entering the workforce-faced financial uncertainty during the pandemic. As a result, purchasing homes became less of a priority, with many opting for rental properties instead as businesses reopened their offices.

Decline In Affordable Housing Supply

As of early 2025, Kolkata and MMR are the only cities with significant affordable housing supply, each with around 31 per cent of upcoming residential projects priced below Rs 40 lakh. Cities like Bangalore have seen a complete loss of affordable housing options, while Hyderabad and Chennai have very limited supply.

The National Capital Region (NCR) has also seen a drastic reduction in affordable housing, with its share dropping from 62 per cent in 2020 to just 11 per cent in 2024. Instead, there has been a surge in demand for high-end and luxury properties, reflected in the rising value of sold inventory in the region.

The Union Budget 2025 And the Future of Affordable Housing

The Union Budget 2025 is expected to provide essential support to the affordable housing sector. Any policy announcements aimed at boosting this sector could have a positive impact. While a full recovery may take time, such measures would greatly improve the outlook for affordable housing in the future.