Real Estate Reality Check: Rising Prices, Investor Interest, and the Affordability Gap in India

India’s real estate sector is undergoing a significant transformation, marked by a dramatic rise in property prices across both residential and commercial segments. Avneesh Sood, Director at Eros Group, suggested that this surge is not merely a function of speculation but rooted in deeper structural shifts and increased transparency within the market.

Double-Digit Growth Across Cities Signals Structural Shift

As per PropTiger’s Q4 2024 data, residential property prices in the top eight Indian cities have jumped by 21% year-on-year—the steepest rise in over a decade. Delhi-NCR led the surge with a 49% increase, while Bengaluru’s Gunjur area recorded a staggering 69% rise between 2019 and 2024. Despite these sharp hikes, sales volumes remained strong, with Knight Frank reporting 350,000 units sold in 2024—a 6.5% increase over the previous year.

Reforms Trigger Transparency and Accurate Pricing

The price surge is partially attributed to regulatory reforms such as RERA (2016), GST (2017), and the Benami Transactions Act, which have helped formalise the market. Avneesh noted that over 108,000 projects were registered under RERA as of Q1 2025, bringing 93% of top-city new launches under its purview. This has led to better pricing data and increased consumer trust. CRISIL and RBI indices now reflect real-time sentiment, with RBI’s Q3 2024 index showing a 3.1% national increase—6.7% in Delhi and 4.9% in Pune.

Premium Segment Drives Growth, But Affordability Falters

Despite robust sales, the housing market is witnessing a skew towards luxury and premium units. Knight Frank’s data reveals that 46% of sales in 2024 came from homes priced above ₹1 crore, up from 29% in 2021. In contrast, the affordable housing segment (below ₹40 lakh) saw a 16% dip in sales.

NCR and Mumbai Becoming Less Affordable

Delhi-NCR’s average property price soared from ₹5,445 per sq. ft. in Q4 2023 to ₹8,105 in Q4 2024. Mumbai now averages over ₹12,600 per sq. ft., pushing EMI-to-income ratios to 51%—well beyond the ideal 40%. Meanwhile, Bengaluru remains more accessible with an index of 26%. A CREDAI–CBRE study showed 61% of developers shifting focus to premium segments due to better margins and regulatory bottlenecks in the affordable housing space.

Investor Interest Skews Occupancy Patterns

Avneesh flagged that rising prices have not necessarily translated into higher occupancy. Over 12.5 lakh units remained unsold across the top 60 cities in Q1 2025. Mumbai alone accounts for 1.65 lakh of these. This is partially explained by investment-led demand. Knight Frank’s Q1 2025 index showed that 33% of luxury buyers were investors, not end-users. NRI investments, which touched $14.9 billion in 2024, further contributed to this dynamic.

FOMO Effect Amplifies Buyer Urgency

Contrary to traditional logic, rising prices have accelerated homebuying decisions. A Housing.com survey (Dec 2024) noted that 62% of respondents were advancing purchase plans to avoid further price hikes. Pune, with a 16% price rise, still recorded 52,000 sales—a 6% increase. RBI’s Jan 2025 Consumer Confidence Survey showed a 9-point gain in the “ideal time to buy” metric, supported by lower repo rates (6.25% in Feb 2025).

Tier-2 Cities Quietly Steal the Show

While metros dominate the headlines, cities like Indore (13% rise), Jaipur (17%), and Coimbatore (10%) are seeing strong growth driven by IT expansion, manufacturing, and connectivity. Land rates in emerging zones like Ulwe (Navi Mumbai), Wagholi (Pune), and Greater Faridabad have jumped 20–30% in just 18 months, according to JLL India. These are backed by real demand, not speculative trading, yet remain underrepresented in mainstream indices.

Conclusion: Price Growth Reflects Health, But Not Without Caveats

India’s real estate market from 2023–2025 has witnessed price appreciation driven by transparency, institutional capital, and strong end-user interest. Foreign investment alone crossed ₹3.1 lakh crore in 2023. However, affordability stress in major metros, an unsold inventory overhang, and an over-dependence on premium launches present medium-term risks.

Experts including Avneesh Sood believe that to sustain this momentum, policy recalibration—especially around affordable housing and GST—is vital. With the government preparing to launch `Housing for All’ 2.0, the sector may soon get the reset it needs to stay inclusive and resilient.

Disclaimer: This news report is a rewritten version of a publicly available source, curated for educational and informational purposes on Indian real estate trends. Readers are advised to consult official sources and certified experts for investment decisions.