India's Real Estate Prices Jumped 48% in 5 Years Is the Market Boom Slowing Down or Set for a New High?
India’s real estate market witnessed a massive 48% price surge in 5 years, led by demand, urban migration, and infrastructure growth. But with interest rate cycles and market saturation, is the boom peaking?
Over the last five years, India’s real estate market has been on a remarkable upswing, with property prices surging by an average of 48% across the top eight cities. Fuelled by rapid urbanization, increasing income levels, robust infrastructure development, and growing demand for home ownership post-COVID, the realty sector emerged as a top-performing asset class. However, with prices now reaching historical highs, the question looms: Has the market boom peaked?
Price Surge Overview
According to the recent report published by CREDAI, Colliers, and Liases Foras, cities like Hyderabad, Ahmedabad, and Delhi NCR saw prices soar up to 60%, while Mumbai and Pune saw relatively moderate increases. Bengaluru and Chennai followed closely, riding on IT sector growth and suburban expansions.
What Drove the Boom?
1. Low Interest Rates (2020-2022): RBI’s accommodative policy spurred home buying.
2. Increased Buyer Confidence: Shift in buyer sentiment post-pandemic.
3. NRI Inflows: Foreign investments, especially from the Gulf and US markets.
4. Government Push: PMAY and infra-led growth in Tier 2 & 3 cities.
Is the Market Peaking?
Despite strong growth, early signs of a slowdown are emerging:
• Rising Unsold Inventory: Especially in premium and luxury segments.
• Rate Hike Impact: RBI’s recent rate actions have slightly cooled housing demand.
• Price Resistance: Buyers in metros are hesitating due to affordability concerns.
Outlook Ahead
While the meteoric rise in prices may not continue at the same pace, India’s real estate sector still holds long-term promise. With smart city development, REIT maturity, and growing rental yields, Tier 2 cities and affordable housing may drive the next wave of growth.
Conclusion
Outlook Ahead
While the meteoric rise in prices may not continue at the same pace, India’s real estate sector still holds long-term promise. With smart city development, REIT maturity, and growing rental yields, Tier 2 cities and affordable housing may drive the next wave of growth.
Source: 1 Finance Housing Total Return Index is India's first unbiased index that captures accurate housing price trends in major Indian cities using actual transaction data from RERA-registered residential projects.
