Trump Tariff: Impact On Real Estate

Trump Tariff: Can have an impact on affordable housing and Threatens to Derail this housing segments in India

In the first half of 2025, a total of 190,000 homes were sold in the country's seven major cities, of which 34,565 were affordable, accounting for 18%.

The US tariffs have also caused concern for the country's real estate industry. These tariffs could harm the affordable housing market, which is already facing difficulties. Experts say that a large number of affordable housing buyers are employed in small and medium-sized industries. The Trump tariffs are expected to hit these industries the hardest, potentially impacting demand for affordable housing.

Angad Bedi, Chief Managing Director of BCD Group, stated that the new US tariffs could pose some short-term challenges to the real estate sector, including foreign investment in the real estate sector, as well as the purchasing power of homebuyers interested in investing in affordable housing. We are in discussions with our stakeholders, industry experts, and the government to understand our future strategy. The company is also seeking an amicable, mutually beneficial solution.

Prashant Thakur, Executive Director, Research and Advisory, at property consultancy firm Anarock Group, stated that demand for affordable housing, i.e., homes priced at ₹4.5 million and below, was severely impacted by the COVID-19 pandemic. The sector is still struggling to recover. US tariffs could dash hopes of a recovery. According to Anarock, a total of 190,000 homes were sold in the country's seven major cities in the first half of 2025, of which 34,565 were affordable, accounting for 18%. In 2019, affordable housing accounted for 38% of total housing sales.

Clearly, the share of affordable housing has declined significantly in the last 5-6 years. Thakur notes that micro, small, and medium enterprises (MSMEs) are a major source of employment and exports. MSMEs formally and informally employ over 260 million Indians, particularly in industries such as textiles, engineering goods, auto components, and other industries. Labor-intensive industries like gems and jewelry and food processing employ workers. This duty could severely impact these industries, impacting the incomes of those working in these industries. This could further reduce sales of already weak affordable housing, as those working in this sector are major buyers of these housing units. He added that a decline in demand would lead builders to reduce the launch of affordable housing projects. Financial institutions providing housing loans to this sector would also face difficulties.

Ashwindar R. Singh, Chairman of the CII (Northern Region) Real Estate Committee, said the primary impact of the US tariffs on India's middle-income housing segment would be the increase in the cost of imported construction materials such as steel, aluminum, and fixtures. This increase could marginally increase home prices or reduce developer margins. However, the tariffs could also reduce global liquidity and impact rupee-dollar dynamics. India's housing demand is largely driven by end-users. Instability abroad could divert some of the NRI capital back home, leading to cost pressures. This could be lower. Developers with a fast-tracked procurement process and disciplined balance sheets will benefit.

Sanjay Dutt, Managing Director and CEO of Tata Realty & Infrastructure, said, "Tariff disruptions tend to dampen demand as companies freeze budgets and slow purchases. The market typically adjusts to the impact of these tariffs over the next six months. The additional costs are factored into project budgets and reflected in selling prices."

Last week, Anarock said in a report that the largest share of homebuyers is in the budget range of Rs 50 lakh to Rs 1 crore, which has increased from around 28 percent in 2022 to 32 percent in 2023 and 35 percent in 2024.