India’s residential real estate market is on the cusp of an affordability transformation by 2025, bolstered by expectations of monetary policy easing. The JLL Home Purchase Affordability Index (HPAI) highlights that most cities, except Bengaluru and Delhi-NCR, will witness improved affordability driven by a cumulative 50-basis-point (bps) cut in repo rates over the next year. Kolkata retains its position as the most affordable city, while Mumbai and Pune are poised to reach peak affordability levels by 2025.
This surge in affordability comes amid a sustained bull run in the residential sector, marked by record-breaking sales and increased project launches. With residential unit sales projected to touch 305,000-310,000 in 2024 and further rise to 340,000-350,000 in 2025, the market’s resilience reflects evolving homeownership aspirations. Despite double-digit price growth and high-interest rates, robust income growth and anticipated rate cuts are set to catalyse market buoyancy.
Kolkata’s consistent affordability underscores the region’s stable growth, while Mumbai and Pune stand out for their optimal pricing dynamics. Bengaluru and Delhi-NCR, although seeing YoY affordability improvements, remain below their peak values due to steep property prices. Hyderabad, leading in price growth with a 132% increase since 2011, and Mumbai, registering the highest income growth at 189%, highlight the disparity between income growth and property prices in urban centres. Effective governance and income growth are pivotal for bridging this gap sustainably.
From a sustainability perspective, policy interventions encouraging affordable housing and inclusive infrastructure investments remain vital. As Indian cities navigate these challenges, urban planning must prioritise balanced development, ensuring that affordability does not compromise environmental sustainability. Collaborative efforts between policymakers and developers will define how the sector adapts to the evolving aspirations of homebuyers while maintaining economic and environmental equilibrium.
