A recent Reuters survey predicts that home prices in India will rise steadily by 7% this year and the following year, driven primarily by an increase in the purchase of luxury real estate.

The poll’s analysts emphasize the ongoing discrepancy between the supply and demand of affordable housing, a problem that will likely continue in the years to come.

The housing market has maintained its robust growth despite multiple interest rate hikes by the Reserve Bank of India between May 2022 and February 2023, thanks to the resilience of Asia’s third-largest economy. 

In 2023, the Indian housing market demonstrated remarkable resilience as home prices increased by 4.3 percent, the highest percentage increase since 2018. 

The Reserve Bank of India’s series of interest rate hikes has little effect on this growth trajectory. 

While rising housing costs are a positive indicator of a thriving market, they also exacerbate poverty and stagnant wages for those in lower socioeconomic groups. 

Aniket Dani, Director of Research at CRISIL Market Intelligence and Analytics, claims that high-net-worth individuals are the main force behind the recent spike in demand for luxury real estate. 

Developers are focusing more and more on starting high-end projects, which makes it harder for the affordable housing market to overcome obstacles.

Experts differ on solutions to concerns about the gap between supply and demand in the affordable housing market over the next two to three years.

There is disagreement over whether the gap will narrow or widen further, underscoring its persistent challenges.

The post-pandemic spike in high-income earners buying homes has driven prices up despite the Reserve Bank of India’s efforts to control inflation through interest rate increases. 

But prospects for interest rate reductions in the coming year are expected to improve affordability, which might help first-time homebuyers. 

Knight Frank India’s national director of research, Vivek Rathi, emphasized the possible effects of interest rate changes on demand dynamics and affordability. 

The survey predicts a noticeable increase in house prices in major cities like Bengaluru, Delhi, and Mumbai, with rises of 5.0 percent, 6.0 percent, and 9.0 percent anticipated for this year. 

These forecasts highlight how India’s real estate market is changing and how its various regions have different dynamics.