Are rising real estate prices pushing middle-class Indians away from homeownership? Experts weigh in

India’s housing market is booming, but rising prices push middle-class families away from ownership and into rentals, according to a Reuters poll

India’s housing market is heating up, but for many middle-class families, the dream of homeownership is slipping further out of reach. Soaring property prices, stagnant wage growth, and a widening shortage of affordable homes are pushing more people into the rental market, experts said in response to a Reuters poll on India’s real estate market.

India’s housing market is heating up, but for many middle-class families, the dream of homeownership is slipping further out of reach. (Picture for representational purposes only) (Mehul R Thakkar/HT)

Average home prices in India have more than doubled in the past decade, and are forecast to rise 6.3% this year and 7.0% in 2026, after climbing about 4.0% in 2024, median estimates from a Reuters survey of 20 property analysts show. The survey was conducted from August 14 to September 12.

Even interest rate cuts by the Reserve Bank of India have offered little respite. While mortgage rates have eased somewhat, property values have risen so steeply that EMIs remain out of reach for many first-time buyers. Analysts note that the average age of home ownership in urban India is gradually shifting from the early thirties to the mid-forties, according to the Reuters poll.

With the market leaning heavily toward premium and luxury homes, entry-level buyers are likely to be priced out, even with policies that look good on paper, it noted.

India faces a shortfall of nearly 10 million homes

According to a Knight Frank India report titled ‘Affordable Housing in India 2024’, India faces a shortfall of nearly 10 million homes, and the gap could triple by 2030 if current trends continue. While luxury housing demand remains robust, fuelled by higher-income homebuyers, affordable housing supply has failed to keep pace. This mismatch is reshaping urban living patterns, with many potential buyers delaying ownership plans and turning to rentals instead.

"The housing shortage is for real, and this, in the face of shrinking affordable housing supply over the last 3-4 years, is pushing prospective buyers into rentals. The shrinking supply, combined with house renting cost at 2-3% per annum compared to 7-8% home loan rate, makes renting a viable option," said Vivek Rathi, National Director- Research, Knight Frank India

Affordable housing took a major hit post-pandemic as buyers in this segment adopted a cautious approach, with new supply and sales plummeting in recent years, according to a report released by ANAROCK, a real estate consultancy in Apr 2025.

ANAROCK research highlights a promising trend where unsold inventory in the affordable housing segment (< ₹40 lakh) fell by 19% across the top seven cities in the past year, from 1.40 lakh units (Q1 2024-end) to 1.13 lakh units (Q1 2025-end).

The report said, luxury housing (> ₹1.5 Cr) saw a 24% surge in unsold stock, rising from 91,125 units (Q1 2024-end) to over 1.13 lakh units (Q1 2025-end), fuelled by robust demand and new supply.

According to another recent report, 'Consumer Sentiment Survey for H1 2025,' released by ANAROCK, a real estate consultancy, skyrocketing home prices across cities have been a major pain point for Indian home seekers over the past few years.

"In India's most over-the-top expensive real estate market, just 39% of our respondent property seekers expressed high concern about the steep prices in the region. The remaining 61% have equally surprising views - 20% are not at all concerned, and 41% only moderately so," said Anuj Puri, Chairman - ANAROCK Group.