India’s Home Prices and Rents Set to Outpace Inflation in 2025: Reuter Property Market Poll

India's real estate market is seeing substantial price increases that are expected to outpace inflation over the coming years. According to a Reuters poll conducted between February 17 and March 4, 2025, property market experts predict a 6.5% increase in average home prices for 2025, with a 6.0% rise anticipated for 2026. This follows a 4% increase in 2024, signaling that home prices will continue their upward trend. As a result, homeownership is becoming increasingly difficult for many, particularly for first-time buyers.

Price Surge in India’s Housing Market

The Reuters poll, which gathered insights from 14 property market experts, reveals that home prices in India are set to increase faster than consumer inflation, which is projected to average 4.3% and 4.4% over the next two fiscal years. The increase in property prices marks a stark contrast to stagnant wages and a lack of well-paying jobs for the middle class, which is leading to a reduction in savings for many working families. Over the past decade, home prices have nearly doubled, further restricting affordability for first-time buyers.

In the country’s two largest cities, Mumbai and Delhi (including its National Capital Region), home prices are expected to rise by 5.8% to 8.5% over the next two years. Other cities, including Bengaluru and Chennai, are projected to see price increases of 5.0% to 7.3%. These anticipated price hikes far exceed inflation, which will likely remain between 4.3% and 4.4% in the next two years.

Rising Rents and Struggling Homebuyers

Alongside home prices, rents are also increasing at an even faster pace. According to the poll, rents in urban areas are projected to climb by 7.0% to 10.0% over the next year, significantly outpacing inflation. This presents a double challenge for homebuyers, as rising rents make it harder to save for a down payment.

For millions, homeownership is becoming an increasingly distant goal. The combination of rising home prices and rents makes saving for a home even more difficult. First-time homebuyers, in particular, face the greatest challenge, as they must navigate a housing market that demands higher investments while wages fail to keep pace.

Supply vs. Demand in the Housing Market

While there is strong demand for homes, particularly in major cities, the supply has not kept up, exacerbating the affordability problem. The shortage of affordable housing in India remains a major issue, despite government efforts to increase the availability of homes. Experts point out that there is a lack of well-paying jobs, and the country’s economic growth has not translated into higher wages for most of the population. Consequently, only high-income earners can afford to purchase homes, further inflating property prices.

India is already facing a shortage of 10.1 million housing units, a gap that worsens the imbalance between supply and demand. Even with policy measures designed to promote affordable housing and better access for lower-income groups, many individuals are still unable to find affordable housing options.

Impact on First-Time Homebuyers

One of the key concerns highlighted by property market experts is the impact of rising prices on first-time homebuyers. The poll found that experts were divided on whether affordability would improve or worsen over the coming year. Half believed affordability might improve, while the other half predicted it would worsen. However, the general consensus is that home prices are rising faster than wages, making homeownership increasingly difficult, especially in high-demand metropolitan regions such as Mumbai, Delhi, and Bengaluru.

As a result of these challenges, many potential homebuyers are turning to the rental market. Renting is increasingly seen as a more viable option for those who cannot afford to buy homes in the current market.

The Need for Government Intervention

Given the ongoing affordability challenges, experts agree that increased intervention from both central and local governments is necessary to address the shortage of affordable housing. According to the poll, 11 out of 13 experts believe that government intervention will be the primary driver for increasing the supply of affordable housing in major cities. Although market-driven solutions have been suggested, experts do not expect any significant shifts without active government involvement.

The government has implemented several affordable housing schemes and regulatory measures to support demand in the past, but experts argue that more robust action is needed to bridge the gap between supply and demand.

Outlook for India’s Housing Market

Despite these challenges, the outlook for India’s housing market remains cautiously optimistic. As property prices continue to rise, so does the demand for residential and commercial spaces, particularly in major cities. Urbanization is rapidly increasing, with more people migrating to cities, placing greater pressure on the housing market.

However, it is clear that homeownership is becoming increasingly out of reach for many middle-class families, particularly as rising property prices and rents exacerbate the situation. For those looking to buy, the path to homeownership is becoming more difficult, and many are being pushed into the rental market.

The trend of rising home prices and rents is expected to continue, and affordability will remain a key issue for first-time buyers. Policymakers and developers will need to focus on increasing the supply of affordable housing, particularly in urban areas, to ensure that future generations have access to homes that meet their needs. Until these issues are addressed, renting may remain the most practical option for millions of individuals and families across India.