Purchasing a house in India is poised to become a more expensive endeavor in the near
future. Experts predict gradual single-digit percentage increases in Buying houses prices over the coming
years, which may lead to deteriorating affordability for first-time buyers. This insightful analysis
comes from a Reuters poll of property analysts.
Buying Houses Might Get Costlier in the Coming Years.
Despite the Reserve Bank of India’s bold move to increase interest rates by 250 basis points
to 6.50 percent, India’s property market remains robust and resilient. Analysts who participated in
the poll, conducted from August 14-31, anticipate that average home prices will rise by 7 percent
nationally this year and the next. This marks an increase from the earlier projections of 6 percent
and 5.5 percent, as forecasted in a June poll.
This optimistic outlook sets India apart from property markets in developed economies,
where house prices are expected to either decline or remain stagnant after surging by as much as 50
percent during the COVID-19 pandemic. Unlike these economies, India has not witnessed a frenzy of
property buying over the past three years, with annual increases averaging a modest 2-3 percent.
This slower growth has allowed for further price appreciation.
Ankit Kansal, the Managing Director of 360 Realtors, attributes India’s real estate market’s
strength to several factors, including a healthy economy, market optimism, higher GDP estimates,
economic diversification, and controlled inflation. He noted, “Multiple factors are driving the real
estate market in India: a healthy economy, market optimism, higher estimated GDP, economic
diversification… (and) inflation is under control, which is adding to renewed optimism.”
However, India, like many developed economies, faces challenges concerning housing
supply, especially in the affordable housing segment. While demand for housing has never been a
problem in a country with a population of 1.4 billion, the shortage of supply remains a pressing
concern.
In response to a supplementary question, the majority of respondents (seven out of eleven)
expressed concerns about the deteriorating affordability for first-time homebuyers in the coming
year. This could potentially lead more individuals to opt for renting, which is also expected to
become more expensive. All twelve respondents to a separate question agreed that average rents
for the remainder of the year would increase, with one predicting a significant rise due to a surge in
demand as employees return to offices.
“With employees returning to offices, there has been a significant surge in demand and
rental rates… (and) given that rents have already increased significantly, we will see a moderate
increase,” noted Anuj Puri, Chairman of ANAROCK.
