As we step into 2025, may this year bring hope, progress, and solutions to Mumbai’s housing challenge. Wishing our readers a prosperous New Year, filled with new possibilities, growth, and a future where homeownership becomes an achievable dream for everyone. Cheers to fresh beginnings!
Mumbai, the financial capital of India, has long been grappling with a housing shortage, and the situation has deteriorated due to rising construction costs and labour shortages. The city’s residential market situation now and in 2025, including the affordable and upper-middle-class segments, remains challenging. As the price for important construction materials such as steel, cement, and labour has gone up tremendously, developers have no other option but to push up their prices, which will affect more homebuyers and exert more pressure on the already constrained housing market in the city in question.
On average, the price of steel and cement has gone up by 10-15% in the past year due to crises in the supply chain and inflation as per the Builders Association of India (BAI). These hikes have directly increased construction costs, prompting developers to pass them on to prospective buyers. As a result, residential development projects in the upper-middle-income and inexpensive housing segments are experiencing delays and are having difficulty maintaining low housing costs.
Affordability remains a challenge for upper-middle-income homes priced between Rs 1 crore and Rs 5 crore. In Mumbai suburbs like Andheri, Goregaon, and Mulund, developers have raised prices by 7-10% due to rising construction costs. For example, a 2-3 BHK apartment once priced at Rs 1.2 crore now costs Rs 1.3 crore, further straining middle-income buyers amid limited supply and high demand.
But the affordable housing segment that targets home buyers below Rs 1 crore is being hit worst. As per data available from the National Real Estate Development Council (NAREDCO), about 39% of affordable homes in Mumbai are under threat of getting stalled, or already stalled, because of the increasing prices of raw materials and labour. Such delays are also worsening the housing shortage in the city since most first-time investors are stuck waiting for buildings that are already scarce.
Migration issues relating to workers and the availability of skilled labour, coupled with the shortage of labour, also put forth other pressure in the increase of costs for construction projects. People who are constructing buildings and houses are pressed for time and in terms of wages, the labour wages have gone up about 8-10% this year only. This has extended the period that projects take, which also negates the time it takes to deliver homes to the buyers.
In conclusion, Mumbai’s residential market is in a limited situation in the year 2025 for sustaining its future. ‘Affordability of homes continues to decline due to escalating construction costs, which has led to the eviction of the middle class and affordable housing from the city.’ Delayed projects and escalating prices make it high time for developers to work on cost-effective ways and strategies for filling the housing backlog. Unless these problems are solved, ownership of homes will be a distant reality to many living in Mumbai.
