India’s housing market has witnessed a significant surge in residential prices across the top seven cities, with average prices climbing by over 50% between 2019 and September 2024, according to ANAROCK Research. Experts express concern that these price hikes may soon hit an unsustainable peak, leading to potential market corrections. The GST Council’s recent revision of the affordable housing bracket—from INR 45 lakh to INR 56 lakh—suggests that escalating costs are not confined to luxury homes, though premium segments have seen the most substantial increases. This upward trend has stirred questions about the broader implications for affordability and housing demand sustainability in urban India.
The luxury housing market, in particular, has experienced remarkable growth, with properties in cities like Mumbai and Gurgaon often commanding substantial premiums. “Luxury apartments are moving quickly, often at exceptional price points,” noted Gulam Zia, Executive Director at Knight Frank India. However, Zia warns that such rapid price escalation in a few key markets may not be justifiable long-term, as affordability becomes a concern even for premium buyers. As prices soar, the entry point for new buyers shrinks, impacting the real estate market’s overall vibrancy and potentially slowing future demand.
Experts remain divided on how soon prices might stabilise. While some anticipate a period of stable prices, others expect this upward momentum to persist for the next few years. Prashant Thakur, Regional Director and Head of Research at ANAROCK, remarked that pushing prices further could disrupt current buyer demand, resulting in decreased sales volume. Rising prices have prompted some buyers to adopt a cautious “wait-and-watch” approach, delaying purchasing decisions amid fears of a market correction. This cyclical nature of real estate suggests that after the current boom, a slowdown may follow, potentially allowing for a price shift.
In addition to affecting prospective buyers, rising prices impact younger generations and those seeking affordable housing. The demand-supply gap in affordable housing persists, with civic planning agencies primarily driving development in this segment as private developers pivot away due to profitability concerns. This trend leaves the younger demographic, who seek homes within central urban areas, increasingly priced out. “The younger generation now faces greater difficulty in owning homes close to the city’s core due to increased costs,” says Anand Moorthy, Chief Business Officer at Square Yards. This growing disparity in housing affordability underscores the need for sustainable, inclusive urban development strategies that balance price stability with broad accessibility.
As demand pressures intensify, the real estate market’s reliance on sustainable practices and affordable options becomes imperative.
