The US’s recent 50 per cent tariff on Indian exports will have a trickledown effect on India’s affordable housing, potentially derailing demand as well as supply in this segment, according to experts.
Illustration: Dominic Xavier/Rediff
Pointing to worker incomes and jobs in micro, small and medium enterprises (MSMEs), and small and medium enterprises (SMEs) that typically make up majority of the customer base of affordable housing, would take a hit in the near terms due to the tariff change, further crippling India’s affordable housing sector, already reeling from the impact of the Covid-19 pandemic.
Angad Bedi, chief managing director of the BCD Group, said the company is engaging with stakeholders, experts, and the government to chart future course of action.
“The industry is likely to face some short-term hiccups with respect to foreign investments into the real estate sector as well as in the purchasing power of homebuyers looking to invest in affordable housing due to the new tariff. We are engaging with our stakeholders, industry experts, and the government to understand the future course of action,” Bedi said.
Prashant Thakur, executive director-research & advisory, Anarock, said in a statement: “This category of homes priced 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.”
Anarock data showed that by the end of the first half of calendar year 2025 (H1CY25), affordable housing’s sales share had fallen to just 18 per cent — or around 34,565 units out of the total 1.90 lakh units sold across the top seven cities — compared to over 38 per cent in 2019, underscoring 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 H1CY25.
Ashwinder R Singh, chairman of the CII (north-region) Real Estate Committee, commented that in India’s middle-income housing segment, the primary impact comes when imported construction inputs such as steel, aluminium, and fixtures experience cost inflation, which might nudge prices up marginally or compress developer margins.
“Tariffs can tighten global liquidity, reprice capital flows, and influence the rupee-dollar dynamics.
“Yet, India’s housing demand in this segment is largely end-user-driven and rupee-denominated. If anything, volatility abroad could redirect some NRI capital homeward, offsetting cost pressures.
“The winners will be developers with agile procurement and disciplined balance sheets,” Singh said.
Sanjay Dutt, managing director and chief executive officer (MD&CEO), Tata Realty and Infrastructure, said: “Tariff disruptions trigger a demand freeze as corporates put budgets on hold and purchases slow.
“Clarity emerges on the extent of the impact and possible alternatives.
“Over the following six months, the market typically adjusts, factoring the additional costs into project budgets and reflecting them in sales prices.”
Last week, Anarock reported that the largest share of homebuyers is in the Rs 50 lakh to Rs 1 crore budget range, rising from about 28 per cent in 2022 to 32 per cent in 2023, and 35 per cent in 2024.
Meanwhile, the share of buyers in the up-to-Rs 25 lakh category fell from roughly 16 per cent in 2022 to 14 per cent in 2024 while the Rs 1–2 crore segment grew from 14 per cent in 2022 to 16 per cent in 2023, and to 17 per cent in 2024.
