Soaring Real Estate Prices Threaten Middle-Class Homeownership in India
India's housing market is booming, but rising prices are pushing middle-class families away from homeownership and into rentals, according to a Reuters poll.
Real EstateHomeownershipMiddleclassRental MarketProperty PricesReal EstateSep 14, 2025
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, according to median estimates from a Reuters survey of 20 property analysts. 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.
Experts warn the affordability crisis could have long-term consequences: delaying wealth creation for households, pressuring rental markets, and widening inequality between those who can afford property and those permanently priced out. Until affordable supply catches up, India’s rental market looks set to swell further, the report said.
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.
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 April 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 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.
Frequently Asked Questions
What is the main issue affecting middle-class homeownership in India?
The main issue is the rapid increase in property prices, which is making it difficult for middle-class families to afford homes, leading them to opt for rentals instead.
How have home prices in India changed over the past decade?
Home prices in India have more than doubled in the past decade, and are forecast to continue rising by 6.3% this year and 7.0% in 2026.
What is the impact of the affordable housing shortage on the rental market?
The shortage of affordable housing is causing the rental market to grow, as more people are unable to afford to buy homes and are turning to rentals.
How are interest rate cuts affecting the housing market?
While interest rate cuts have eased mortgage rates somewhat, the steep rise in property values has made EMIs (Equated Monthly Installments) unaffordable for many first-time buyers.
What is the current trend in the luxury housing segment?
The luxury housing segment is seeing a robust increase in demand and new supply, with unsold stock rising by 24% over the past year.
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