The Indian real estate market has changed rapidly over the past few years. This change is mostly positive for the new home buyers seeking a place to live. The change has occurred along with trend shifting and changing economic conditions. Those looking to buy a new home in India must understand the current situation of the Indian real estate market and take advantage of the available opportunities. Through this article, you will understand why this is the perfect time to buy a home in India, and you will know if you’re ready.
Why is this an excellent time to buy a house?
According to a Knight Frank India survey, 51% expect growth in the home-buying market, while 24% believe prices will remain stable. Pune saw over 1 lakh property registrations in the first seven months of 2024, with July registrations up 25% and stamp duty collections increasing by 47%. The market remains stable, focusing on properties between Rs 50 lakh and 1 crore, offering affordable options for mid-range buyers. Premium homes (above 1 crore) saw an 80% rise in transactions, and demand for larger apartments grew by 7%.
According to another Knight Frank report, home affordability will remain stable. The first half of 2024 saw stability due to steady home loan interest rates since the end of 2023. It is expected that the second half of 2024 is going to see a similar impact. Cities like Ahmedabad, Pune, and Kolkata are the most affordable, with 21% and 24% EMI-to-income ratios, respectively, indicating that households spend a manageable portion of their income on EMIs.
Though Mumbai is above the affordability threshold, the stability in interest rates and rising income levels have helped maintain affordability across most cities, supporting sustained homebuyer demand.
Economic growth and steady housing prices have also kept the market favourable for buyers, especially those seeking mid-range homes. This stability ensures that homebuyers can still afford property purchases even with previous interest rate hikes.
Furthermore, the real estate market has seen a 42% year-on-year increase, reaching USD 1.7 billion in private equity investments. Most of this investment is in the residential market, hinting at ample availability for homebuyers. Cities like Bangaluru and Hyderabad are seeing the maximum development.
As per JLL’s global real estate transparency Index 2024, India is now a transparent real estate market. This increased transparency offers better property information access, helping buyers make informed decisions. India is seeing stronger regulations and digitization of records, which has helped protect buyers and lower risks of disputes and frauds. This boost in transparency is also a cause for investments in Indian real estate, opening doors to better quality and more diverse housing options.
Current status of the Indian real estate market
Rapid growth and recent developments
The last few years were a boon for the property market as it experienced rapid growth. While the market has been looking weak regarding home sales for the first time in Q2 2024, this dip does not overshadow the major improvements. We are looking at some major long-term positive trends that hint at a compelling time to buy a home in India.
Key positive factors of the country’s housing market:
- Economic Growth: India’s robust economic growth has supported purchasing power and spurred demand in the real estate sector.
- Improved Transparency: Enhancements in market transparency and institutional investment have created a more stable and predictable environment for buyers and investors.
- Increased affordability: Government initiatives like the Pradhan Mantri Awas Yojana (PMAY) have made homeownership more accessible to the middle and lower-income segments.
- Urbanization and migration: The ongoing urbanization trend and migration from rural to urban areas are driving demand for housing.
Positive highlights in the Indian real estate market
The Indian real estate sector has seen tremendous growth with various reports, including Knight Frank’s ‘New Horizon Outlook 2024, showing strong investor confidence and promising growth. Overall, the sector is expected to see a Compound Annual Growth Rate (CAGR) of 9.2%, reflecting its resilience and positive outlook. Affordable housing is thriving because of low levels of non-performing loans and the possibility of adjustments in interest rates. Here are some more positive highlights in the real estate sector:
Strong institutional investment
Indian real estate has seen major confidence from both local and international investors. An investment of $5.8 billion is seen by institutions, making the real estate market even more attractive. This boost in investments is helping in funding new projects and developments.
Significant price appreciation
Ever since the pandemic, property prices have seen approximately 26% increase, expressing a surge in demand. This increase is particularly visible in the luxury segment, where high-net-worth individuals drive up prices. New home sales hit an 11-year high in the first half of 2024, indicating a resilient market with continued growth potential.
Infrastructure developments
Ongoing and planned infrastructure projects, such as new metro lines and road expansions, are boosting property values and enhancing connectivity.
Strong performance in major cities
Cities like Mumbai, Delhi, and Pune are experiencing significant real estate activity, with high volumes of new launches and strong sales performance.
Growing Segments and Price Points
The luxury real estate segment has seen a surge in demand, with a notable increase in high-priced apartment sales in major cities like Mumbai and Delhi. This segment’s growth underscores the market’s resilience and the strong purchasing power of buyers.
Current home loan prices and trends
Interest rates are expected to come down
Currently, the home loan interest rates in India are competitive. The Reserve Bank of India (RBI) has maintained its interest rate stance, leading to stable home loan rates. Many experts believe that the home loan interest will go down in the near future.
- Top Lenders: The Union Bank of India and Bank of Maharashtra offer the lowest rates starting at 8.35% for loans of ₹75 lakhs with a 20-year tenure. This translates to a monthly EMI of approximately ₹64,374, making these options attractive for borrowers.
- Other Competitive Rates: Banks like Bank of Baroda, Punjab National Bank, and Indian Bank offer rates starting at 8.40%, resulting in an EMI of around ₹64,613. UCO Bank and Central Bank of India follow with rates at 8.45%, and SBI offers rates starting at 8.50%.
Growing share of high-value home loans
Data from Knight Frank shows a notable increase in home loan applications for properties valued at over ₹75 lakhs. This segment’s share has grown from 19% in March 2020 to 31.4% in March 2024, reflecting a rising preference for higher-value properties.
Emerging cities for buying real estate in India
India is seeing growth opportunities in its tier 2 and tier 3 cities due to rapid expansion and consistently improving infrastructure. Here are some popular cities in India with promising future for real estate:
Bangalore: Bangalore’s tech ecosystem appears to be thriving due to the projects such as Bangalore Metro Phase 2 and Peripheral ring road. Bangalore’s skilled workforce is making it a prime location for buying a property for long term gains.
Delhi (NCR): The national capital region (Gurgaon, Noida, & Greater Noida) can be consisered for investment in real estate. Projects such as regional rapid transit system (RRTS) and new metro routes are boosting the real estate market.
Coimbatore: Various investors and real estate experts are suggesting Coimbatore to be beneficial considering its lower residential prices and high quality of life. Projects like Western Bypass Road and the airport expansion have aided in the development of the city.
Hyderabad: Hyderabad is another lucarative option for buying real estate in India. Backed up by major IT companies and a world class infrastructure such as Hyderabad metro rail and outer ring road, the city is offering afforable housig options and investment opportunities.
Property price appreciation in India
Property prices have seen a surge in India’s top cities, such as Hyderabad, Bangalore, Delhi (NCR), Mumbai, and Kolkata. New infrastructural developments, metro routes, and foreign investments have aided the property appreciation in these areas. On average, these cities saw a remarkable appreciation of 44%
Source: Anarock research
Source: Anarock research
Cities with the most property price appreciation in India
Hyderabad: Between 2019 and 2024, Hyderabad has seen the most price appreciation (64%) among top Indian cities. The area of Kokapet saw a massive appreciation of 89%, making it one of the most lucrative areas for real estate investment.
Bengaluru: This city witnessed a 57% overall price rise. Localities such as Bagaluru saw a dramatic 90% increase, while Whitefield recorded an 80% appreciation. Residential prices in Whitefield climbed from ₹4,765 per sq. ft. in 2019 to ₹8,600 per sq. ft. in 2024, reflecting strong growth due to high demand in this tech hub.
National Capital Region (NCR): The Dwarka Expressway area saw a 79% price appreciation, with prices rising from ₹5,359 per sq. ft. to over ₹9,600 per sq. ft. Greater Noida West stands out for an astonishing 129% increase, reflecting high demand in this part of the NCR region.
Mumbai Metropolitan Region (MMR): Property prices in MMR saw a steady 48% rise. Despite Mumbai’s high base prices, demand in this financial hub remains strong, leading to consistent price growth.
Kolkata: Although Kolkata had the lowest price appreciation among the top cities, it still recorded a 25% increase in property prices. This growth, while modest compared to other cities, reflects Kolkata’s relatively stable real estate market.
Emerging Market Segments
- Luxury Segment: High-net-worth individuals drive demand for luxury properties, leading to significant price increases in cities like Mumbai and Delhi.
- Mid-Range Segment: This segment is also growing, with increased demand for properties in the ₹50 lakhs to ₹1 crore range.
What this means for homebuyers
Considering the rapid real estate growth in top cities, there could not be a better time to buy a property in India. High-growth localities like Hyderabad, Bengaluru, and NCR offer strong potential for price appreciation, making them prime targets for investment.
Situation of affordable housing in India: Act before it is too late
Declining affordable housing supply
Affordable housing is any property that costs under $54,000 or Rs. 45,34,861. This segment has seen the lowest inventory levels in over a decade. People are shifting towards higher-priced properties. Factoring in the high demand in this segment and the decrease in the inventory is a signal for the homebuyers to act before it gets too late.
Market dynamics across significant cities
- Mumbai: The affordable housing segment is exceptionally constrained, with key areas like Dombivli and Panvel experiencing rising prices.
- Delhi: Affordable housing options are becoming scarce in Uttam Nagar and Rohini, pushing buyers towards higher-priced segments.
- Bangalore: Although affordable housing is available, prices are climbing, especially in the northern and eastern parts of the city.
- Chennai: Affordable housing remains relatively accessible, but increased demand is beginning to push prices higher.
Key considerations for new home buyers
While now may be the right time, buyers should be mindful of a few factors:
Affordability
There is a consistent rise in the land and material costs. Metro cities have seen most of the hikes, making affordable housing inaccessible. New home buyers should consider investing in suburban or semi-urban markets for better returns on their investment. This is mainly because demand is still robust in these areas, and prices are more affordable than in urban areas.
Interest Rates:
While the interest rates have stabilised for now, they are still relatively high. It is suggested to the new homebuyers to factor in their financial situation and loan affordability to avoid over-leveraging.
Market Dynamics
As developers shift focus from affordable housing to mid and luxury segments, the available supply of budget homes may shrink further, which could increase prices in the near term.
The current combination of favourable home loan rates, rising property prices, and declining affordable inventory create a compelling case for purchasing a home in India. Prospective buyers can capitalize on these conditions to secure favourable financing and benefit from appreciating their property investments over time.
Housing.com POV
Buying a home is an emotional decision for many. Everyone wants to stay where they feel secure and free to do whatever they want. The right time to buy a house, however, is when you can afford it. If your finances are not ideal at the moment, or if home values in your area are declining, it might be better to wait.
Looking ahead, price appreciation is expected to continue in most major cities. The shift towards mid and luxury segments suggests a focus on premium housing, but suburban and smaller cities will likely see growth in affordable housing. Lower-tier cities are also expected to witness demand growth, fueled by improving infrastructure and economic development.
FAQs
When is the right time to buy a property in India?
The right time to buy property in India is now, as prices have been rising steadily, with an average appreciation of 44% since 2019. Interest rates are stable, demand is strong, and further price growth is expected, especially in major cities. However, buyers should act soon before prices climb further.
Have property prices appreciated in India recently?
Prices have increased by an average of 44% since 2019, with cities like Hyderabad seeing up to 64% growth.
What home loan rates can I expect in 2024?
Public sector banks offer home loans starting from 8.35%, with stable rates since May 2022.
How is affordable housing performing in India?
Demand is strong in tier-2/3 cities, but urban areas are seeing a decline due to rising land and material costs.
Will property prices continue to rise?
Yes, the trend shows continued growth in property values, especially in major cities and premium segments.
Is the real estate market in metro cities still affordable?
Affordable housing is shrinking in metros, but mid and luxury segments are booming. Options are better in tier-2/3 cities.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
