Type to search

Analysts Keep the Faith in India’s Recovering Housing Market

India will buck the global trend of sinking housing prices due to strong demand for home ownership, analysts said

Trucks are parked at the site of an under-construction residential building project, which has been stalled, in Mumbai


India’s housing market will remain resilient despite rising interest rates, according to polled property analysts who have only tweaked their predictions from three months ago.

Defying a global trend of falling housing prices as mortgage rates rise and crimp affordability, India has exhibited resilience and is emerging from a decade-long downturn due to strong demand.

A major source of employment in a country of 1.4 billion people where a majority are unskilled, the Indian housing market is likely to remain a stable contributor to economic activity in Asia’s third-largest economy.

Also on AF: Chinese Minister Warns US: ‘Mistaken’ Policies Risk ‘Conflict’


Average home prices were forecast to rise 5.5% and 5.0% this year and next, poll medians from a February 16 to March 3 survey of 13 property market experts showed.

Those expectations were largely unchanged from a December survey, slightly outpacing consumer price inflation projections of 5.1% and 4.5% for fiscal years 2023/24 and 2024/25, respectively, a separate poll showed.

“Post the Covid-19 pandemic, the urge to own a house is higher than ever and thus, the residential segment has witnessed strong demand,” said Divyesh Shah, associate director at CARE Ratings.

“While rising inflation and interest rates may impact demand to a certain extent in the near-term, the industry is however poised for steady growth in the coming 2-3 years and thus home ownership is likely to increase.”

The Reserve Bank of India has raised interest rates by a total of 250 basis points since May last year as it tackles stubbornly high prices and is expected to add another 25 basis points, taking it to 6.75%, in April and then pause until the end of 2023.

Demand for Ownership

All but one of 13 analysts said home ownership would rise over the next few years, partly due to a strong inclination towards owning rather than renting a home.

“India has always been an economy where home purchase is preferred over renting. The uncertainty around the pandemic further amplified the need for home ownership and security,” said Abhinav Joshi, head of research at CBRE India.

The primary concern, in one of the most populous countries in the world where millions live in abject poverty, is the perennial lack of affordable homes.

A recent increase in unemployment also raises concerns about the sustainability of the current housing market trend.

All but one of 11 analysts who answered a separate question said purchasing affordability over the coming year would worsen. Only one said it would improve.

“Amid rising prices, affordability will only worsen in the coming quarters,” said Anuj Puri, chairman at ANAROCK Property Consultants.

The financially stable seekers will continue to buy property, but buyers in the affordable and mid-segments would be impacted by this,” he added.

  • Reuters, with additional editing from Alfie Habershon


Read more:

Apple Supplier Foxconn Speeds up India Expansion in China Shift

India Leads World in Internet Shutdowns for Fifth Year in a Row

Top Indian Court Gets Regulator, Panel to Check on Adani Dealings


Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.


AF China Bond