By Rahul Trivedi and Vivek Mishra
BENGALURU (Reuters) – Average house prices in India will rise steadily over the next few years, driven mainly by demand from wealthy individuals, while the rising cost of living will put home ownership out of reach for most people, a Reuters survey showed.
As India’s middle class tightens its belt, cutting back on everything from tea to two-wheelers due to soaring consumer inflation, the richest 1% who own 40% of the country’s wealth are snapping up homes in the cities with well-paying jobs.
While that’s enough to keep prices rising in the short term, real estate analysts say there are limits to how much the wealthy can keep demand alive in an already slowing economy.
After rising 4.3% last year, house prices in India – broadly referring to housing in major cities – were expected to rise 7.0% this year, 6.5% in 2025 and 7.5% in 2026. average forecasts from the survey from November 12 to 29. Shown by 12 real estate market experts.
This outlook is largely unchanged from the September survey.
“The segment that is driving all this price appreciation is the luxury segment. And that will continue for some time, but the overall story that we all see is very rosy,” said Ajay Sharma, director of Valuation Services at Colliers International.
But Sharma said there were clear signs that most people were struggling with the cost of living.
“No one is talking about the structural problems in demand. Once the top cream stops buying, you’re going to have a huge drop in sales.”
Meanwhile, rents are expected to rise even faster than house prices, by 7.5% to 10% over the next year, according to a median range provided by 11 real estate experts.
“The emphasis on housing affordability will put pressure on more people to opt for rentals, pushing demand in this segment,” said Sunita Mishra, head of research at Housing.com and PropTiger.com.
As real estate developers focus on the luxury market, the lack of affordable homes continues to sideline many first-time buyers — especially those in the middle and lower income groups.
“The fact that most of the new launches and available new stock in the country’s urban centers are in the premium and high-end segments would also have a big impact, driving upward rent growth,” Mishra added.
While the inability to build enough affordable homes is a common problem in most countries, the scale of the challenge is staggering in India, home to the world’s largest population of over 1.4 billion people.
Asked what will happen to affordability for first-time home buyers over the next year, eight real estate experts said it would get worse and only four said it would improve.
A significant drop in interest rates could ease some of the pressure on homebuyers, but economists don’t expect more than 50 basis points worth of reserve cuts Bank of India (NS:), probably only at the beginning of next year.
(Other stories from Reuters Global Housing Survey Q4)
