Darjeeling, renowned as the ‘Queen of the Himalayas’, is one of the high‐altitude towns in India, distinguished by its exceptional topography and picturesque landscape. Given the challenges posed by limited land availability, susceptibility to natural hazards, and the need for context‐specific housing interventions in such hilly terrains, understanding housing conditions becomes paramount. Thus, this research explores the spatial patterns and heterogeneity of urban housing wellness in Darjeeling's hilly urban centre. A comprehensive assessment was conducted utilizing 15 key indicators. Three principal indices were formulated: Residence Quality, Residence Essential Services, and Residence Asset & Possession, culminating in the Urban Housing Wellness Index (UHWI). The index construction employed the Geographically Weighted Principle Component Analysis (GWPCA) technique. In further analysis, Univariate Local Indicators of Spatial Association (LISA) were used to determine clustering and spatial dependence, while Moran's I was utilized to gauge the spatial autocorrelation of housing conditions. A notable clustering pattern and spatial autocorrelation was observed in the urban housing wellness of the study area. The present study offers novel insights into the intricate dynamics of housing conditions in unique hilly terrains.