Kolkata Leads in Home Affordability, Mumbai Expected to Follow by 2025: JLL Report
India's residential real estate market is set to experience a significant shift in affordability by 2025, with projected interest rate cuts driving the change.
Real EstateAffordable HousingJllInterest Rate CutsMumbaiReal Estate MumbaiNov 27, 2024
JLL, a leading global professional services firm specializing in real estate and investment management, has conducted an in-depth analysis of the Indian real estate market. The firm's report highlights the growing trend of increased affordability in major cities, with Kolkata leading the charge.
on the Real Estate Market in Kolkata
Kolkata has historically been known for its relatively affordable housing compared to other major cities in India. The city's real estate market has been driven by a combination of factors, including lower land costs and a stable economic environment. However, recent developments, such as the projected interest rate cuts, have further boosted the city's position as a hub for affordable housing.
Mumbai's Path to Increased Affordability
While Mumbai has traditionally been one of the most expensive cities in India for real estate, the JLL report suggests that this trend is expected to change by 2025. The city's high property prices have long been a deterrent for potential homebuyers, but the anticipated interest rate cuts are expected to make a significant difference. Reduced interest rates will lower the cost of home loans, making it more feasible for a larger number of people to enter the property market.
Factors Driving the Shift
Several factors are contributing to the projected increase in affordability
1. Interest Rate Cuts The Reserve Bank of India (RBI) is expected to cut interest rates in the coming years, which will directly impact the cost of home loans. Lower interest rates mean lower monthly payments, making home ownership more affordable.
2. Government Initiatives The Indian government has implemented several schemes to promote affordable housing. These include the Pradhan Mantri Awas Yojana (PMAY), which aims to provide housing for all by 2022. Such initiatives are expected to further drive down the cost of housing.
3. Economic Growth Steady economic growth in India has led to increased disposable incomes, particularly in urban areas. This has enabled more people to consider buying homes, even in cities where property prices have traditionally been high.
4. Increased Supply There has been a notable increase in the supply of affordable housing units in recent years. Developers are responding to the demand for more affordable options, which is helping to balance the market and keep prices in check.
Impact on the Real Estate Market
The shift towards increased affordability is expected to have a significant impact on the real estate market in India. For starters, it will attract more first-time homebuyers, who have been priced out of the market in the past. This influx of new buyers will stimulate demand, potentially leading to a more dynamic and resilient market.
Additionally, the increased affordability will likely lead to higher property sales volumes, which can benefit developers and other stakeholders in the real estate sector. It may also encourage more investment in the market, as the prospect of a more stable and affordable housing sector becomes more attractive to investors.
Conclusion
In conclusion, the JLL report highlights a promising trend in India's real estate market, with Kolkata leading the way in home affordability and Mumbai expected to follow by 2025. The projected interest rate cuts, along with other economic and government-driven factors, are set to make home ownership more accessible to a larger segment of the population. This shift is expected to have a positive impact on the overall real estate market, potentially leading to increased sales volumes and greater market stability.
About JLL
Jones Lang LaSalle (JLL) is a leading professional services firm specializing in real estate and investment management. With a global presence, JLL provides a wide range of services, including property and facility management, real estate investment, and strategic advisory services. The firm's insights and reports are highly regarded in the industry and are often used to inform investment and policy decisions.
Frequently Asked Questions
Why is Kolkata leading in home affordability?
Kolkata has historically had lower land costs and a stable economic environment, making it more affordable compared to other major cities. The projected interest rate cuts are further enhancing its position as a hub for affordable housing.
What factors are driving the increase in home affordability in India?
The key factors include interest rate cuts, government initiatives like PMAY, steady economic growth, and an increased supply of affordable housing units.
How will the increase in affordability impact the real estate market?
The shift towards increased affordability will attract more first-time homebuyers, stimulate demand, and potentially lead to higher property sales volumes, benefiting developers and investors.
What is the Pradhan Mantri Awas Yojana (PMAY)?
The Pradhan Mantri Awas Yojana (PMAY) is a government scheme aimed at providing housing for all by 2022. It includes various initiatives to promote affordable housing and make home ownership more accessible.
When is Mumbai expected to see a significant increase in home affordability?
According to the JLL report, Mumbai is expected to see a significant increase in home affordability by 2025, driven by projected interest rate cuts and other economic factors.
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