In India, home prices are anticipated to surge faster than consumer inflation next year, as per a Reuters survey of property analysts. The growth is expected to be primarily driven by affluent buyers investing in newly-built luxury residences within urban areas. Despite a series of interest rate hikes by the Reserve Bank of India earlier in the year, the housing market remains resilient, supported by the country's robust economic prospects.
The survey, conducted from November 16 to 30 among 12 property market experts, forecasts a 6.8% increase in average home prices for this year and the next, doubling the 3% rise observed in 2022 according to calculations based on the RBI's House Price Index. This acceleration, if realized, would mark the first time in five years that home price inflation surpasses the rise in consumer prices.
Anuj Puri, Chairman at ANAROCK Property Consultants, emphasized rising input costs and a shift towards high-end housing segments as key drivers for this price surge. He also highlighted the expectation of continued low interest rates, which are likely to further stimulate housing demand.
Despite concerns about affordable housing supply, the survey reflects divided opinions among experts. While some foresee improvements in supply, others believe it may worsen, posing challenges for middle and low-income families seeking homeownership.
The escalating rental costs, particularly in major cities like Bengaluru, have exacerbated the affordability crisis, making it difficult for many to consider buying homes. This situation has forced individuals like Punit Pansari, working at an investment bank in Bengaluru, to rethink homeownership due to the exorbitant prices and unrealistic rents.
The pandemic-induced income uncertainties have led households to dip into savings, hindering many from purchasing homes. However, most analysts still anticipate an increase in homeownership compared to renting over the next five years, despite the current challenges faced by prospective buyers.
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