Why Earning ₹20 Lakh a Year Isn't Enough to Buy a Home in India
Since the pandemic, luxury housing has outperformed affordable segments, with premium homes accounting for a growing share of sales. This trend is pushing out legitimate homebuyers and benefiting developers and investors.
Real EstateBlack MoneyProperty PricesLuxury HousingMiddle ClassReal Estate NewsJun 20, 2025
Avigyan Mitra, an investment advisor, points out that the real estate sector has become a trendy repository for black money. Cash-fueled deals are distorting market dynamics and squeezing the middle class.
In a LinkedIn post, Mitra explained that undeclared wealth finds fewer havens in traditional financial instruments, but real estate still offers a safe haven. “It’s nearly impossible to store large amounts of undeclared cash elsewhere,” Mitra wrote. “But this sector continues to accommodate cash components that would be impossible in other asset classes.”
The result is artificially inflated property prices that have little to do with documented income or market demand. “That guy earning ₹20 lakhs is competing with a rich buyer who uses the same flat as an untraceable deposit,” Mitra noted.
Developers are responding by designing projects that appeal more to investors seeking to park unaccounted wealth rather than to families. High-end amenities like gyms, pools, and lounges are not just about lifestyle; they are tools to justify premium pricing that hides cash components.
“These ‘world-class’ facilities aren’t added because genuine homebuyers demand them,” Mitra added. “They’re included because cash-heavy buyers view property as an investment vehicle first and a residence second.”
Since the pandemic, luxury housing has outperformed affordable segments, with premium homes accounting for a growing share of sales. Analysts attribute this shift in part to speculative buying fueled by untraceable funds, especially in major cities.
The impact is clear: legitimate, salaried buyers are priced out, while developers and investors ride a bubble built on opacity. What’s sold as luxury living, critics say, is often just a high-gloss front for black money laundering.
Frequently Asked Questions
What is causing the rise in luxury housing prices in India?
The rise in luxury housing prices is largely due to speculative buying fueled by untraceable funds, often referred to as black money. This has led to artificially inflated prices that do not reflect genuine market demand.
How are developers responding to the influx of black money in the real estate market?
Developers are designing projects with high-end amenities to appeal to investors who are looking to park unaccounted wealth. These amenities help justify premium pricing that hides cash components.
Why are legitimate homebuyers being priced out of the market?
Legitimate homebuyers, often salaried individuals, are being priced out because they are competing with rich buyers who use properties as untraceable deposits for their undeclared wealth. This drives up property prices beyond what most middle-class buyers can afford.
What role do high-end amenities play in the real estate market?
High-end amenities like gyms, pools, and lounges are often added to properties to justify premium pricing. These features are more about attracting cash-heavy investors who view property as an investment vehicle rather than a residence.
What is the impact of this trend on the overall real estate market?
This trend is creating a bubble in the real estate market, where prices are being driven by speculative and untraceable funds rather than actual demand. It is leading to a situation where genuine homebuyers are increasingly priced out of the market.
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