High Demand For Luxury Properties To Make Affordable Housing Costlier For Indians: Survey

The survey noted that the Indian economy is set to grow at a faster pace than its counterparts, however, the benefits of this growth are likely to help only a selected group of people

Home prices in India are expected to increase in the next few years as a surge in demand for luxury properties drives up the prices in the real estate market, a recent survey found.

The survey, conducted by Reuters, noted that the Indian economy is set to grow at a faster pace than its counterparts, however, the benefits of this growth are likely to help only a selected group of people. The study, conducted with housing experts, stated that affordable homes are reducing in the market and individuals with cash are circling the real estate sector. 

This is expected to continue making purchasing decisions for first-time buyers difficult and push them to keep renting. National home prices in the country surged by 4.3 per cent last year and are expected to climb 7.75 per cent in the current year. In the next two years, these prices are further estimated to soar 6-6.25 per cent. Notably, the average housing prices are indicative of housing in major cities.

Reason Behind Boom In Luxury Segment

Elaborating on the survey’s findings, Anuj Puri, Chairman, ANAROCK Property Consultants, said that the luxury housing segment is becoming increasingly popular in the country. This unstoppable growth has left a major impact on the affordable housing market. “Tellingly, there was no new affordable supply. It is little wonder that developers are aligning supply with the prevailing demand and are launching more luxury housing projects now,” the executive noted.

Regarding the affordability for first-time buyers in the domestic housing market, the survey found that experts held mixed opinions, where 10 property market analysts said that it would improve and 8 noted that the conditions would worsen.

The study noted that demand in the housing market is driven by a select few people, however, the scale of the luxury market is surprisingly large. The market offers developers great incentives to focus on ultra-rich individuals, while the profit margins in the affordable housing segment are getting low.