India's Home Prices Set to Outpace Inflation in 2024, Rents to Rise Even Higher: Reuters Poll

2025-03-05 01:57:38

Sluggish Economic Growth and Stagnant Wages Leave Millions Struggling as Home Prices and Rents Surge

Despite faltering economic growth, stagnant wages, and a shortage of well-paying jobs depleting the savings of millions of working-class families, India's housing market continues to soar, with home prices nearly doubling over the past decade.

A recent Reuters poll of housing experts suggests that India's average home prices and rental costs will rise faster than consumer inflation this year. However, experts remain divided on whether affordability for first-time homebuyers will improve or worsen.

A growing gap between high demand and limited supply has driven home prices to levels that force millions to rent instead of buy. According to a survey of 14 property market analysts conducted between February 17 and March 4, average home prices are expected to rise by 6.5% in 2024 and 6.0% in 2025, following a 4.0% increase last year.

The forecast remains largely unchanged from a December poll conducted before the Reserve Bank of India began what is expected to be a short and shallow rate-cutting cycle. Meanwhile, urban rental prices are projected to surge by 7.0%-10.0% over the next year, significantly outpacing consumer inflation, which is expected to average 4.3% and 4.4% over the next two fiscal years.

With skyrocketing rents, first-time buyers are finding it even harder to save for a down payment.

“This is a double blow—home prices are outpacing inflation, and rents have been soaring for years. For millions, homeownership is becoming an unattainable dream," said Pankaj Kapoor, Managing Director at real estate research firm Liases Foras.

The affordability crisis is particularly pronounced in India's major cities. Experts predict home prices in Mumbai and Delhi-NCR will rise between 5.8% and 8.5% this year and next, while Bengaluru and Chennai are expected to see increases of 5.0%-7.3%.

Property analysts are split on whether affordability will improve or worsen for first-time buyers. Some believe rising incomes may help, while others argue that price escalations will continue to outpace earnings, making homeownership increasingly difficult—especially in high-demand metro areas.

"With these price escalations, affordability for first-time buyers is likely to decline as rising costs make homeownership more challenging, especially in metropolitan regions," said Arvind Nandan, Managing Director of Research at Savills India.

As India rapidly urbanizes, finding affordable housing remains a major challenge, despite government efforts to increase supply. A shortage of over 10.1 million affordable housing units persists, and most experts believe intervention from central or local governments will be needed to bridge the gap.