By Rahul Trivedi and Vivek Mishra
BENGALURU (Reuters) – Average house prices in India are set to rise steadily in the coming years driven largely by demand from the wealthy, while rising living costs will put home ownership out of reach for many, a Reuters poll found.
While India’s middle class tightens its belt, cutting everything from tea to two-wheelers due to rising consumer prices, the richest 1% who own 40% of the country’s wealth are snapping up homes in cities with well-paying jobs.
While that’s enough to push prices up in the short term, property analysts say there are limits to how much the wealthy can save in an already shrinking economy.
After rising by 4.3% last year, house prices in India – referring to houses in major cities – were expected to rise by 7.0% this year, 6.5% in 2025 and 7.5% in 2026, the median estimate from 12-29 Nov. 12 property market experts revealed.
This view has not changed since the September poll.
“The segment driving this price increase is the luxury segment. And this will continue for some time, but the overall history we are seeing is positive,” said Ajay Sharma, managing director of Valuation Services at Colliers International.
But Sharma said there are clear signs that many people are struggling with the cost of living.
“No one is talking about structural issues in the demand. If the top cream just stops buying, you will have a big drop in sales.”
Meanwhile, rents are expected to rise faster than house prices, by 7.5% to 10% in the coming year, according to an average of a range provided by 11 real estate experts.
“Affordability concerns will force more people to choose to rent, boosting demand in this sector,” said Sunita Mishra, head of research at Housing.com and PropTiger.com.
With real estate developers focusing on the high-end market, the shortage of affordable housing continues to put off first-time buyers—especially those from the middle-income groups.
“The fact that many new releases and availability of new stock in the country’s cities are in the prime and high-end sectors would have a profound impact, encouraging rental growth,” added Mishra.
While the inability to build adequate affordable housing is a well-known problem in most countries, the magnitude 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 the affordability of first-time home buyers in the coming year, eight real estate experts said it will get worse and only four said it will improve.