Home › Articles › Property Prices Strengthen as Rising Wealth Fuels Housing Demand in India

Property Prices Strengthen as Rising Wealth Fuels Housing Demand in India

India s residential property market continues to show strong momentum, driven largely by the rapid rise in the country s wealthy population. According to a nationwide housing price assessment for 2024, average home prices across major Indian cities are steadily increasing, reflecting sustained demand for premium residential properties. With the population of high net-worth and ultra-high net-worth individuals growing at an estimated annual rate of around 12%, demand for larger and high-value homes has overtaken sales in the affordable housing category. This shift highlights changing buyer preferences and growing purchasing power among affluent households. Nationwide Housing Price Index Shows Upward Movement The All-India Housing Price Index (HPI), which tracks price changes in newly launched residential properties across key urban markets, recorded a reading of 129 points in December 2024 , marking a four-point increase since the beginning of the year. The rise is attributed to strong buyer confidence, stable demand, and continued interest in real estate as a long-term asset. While prices continue to move upward, the pace of growth has softened compared to the previous year. In December 2023, the index stood higher, reflecting the exceptional performance of the housing market during that period. Most Cities Record Price Gains Despite Affordability Concerns Except for a few regions such as the Mumbai Metropolitan Region and Ahmedabad, most cities included in the assessment reported positive price movement. In several locations, housing costs have crossed affordability thresholds, even as policymakers explore measures to make homeownership more accessible. The National Capital Region emerged as the strongest-performing market, registering the highest index reading at 195 in December. This surge is linked to extraordinary demand over the past two years, rising land and construction costs, and increased participation from well-capitalised developers entering the region for the first time. Ongoing infrastructure investments by state governments and steady inflows from equity markets are expected to keep price growth intact. Micro-markets such as Dwarka Expressway, Sohna, and Noida Extension continue to attract strong investor and end-user interest. IT Hubs Maintain Strong Market Position India s leading technology-driven cities Bengaluru and Hyderabad secured the second and third positions on the index. Their expanding commercial ecosystems, job creation, and steady demand for quality housing have helped maintain price resilience in these markets. Affluence Drives Growth, But Middle-Class Pressure Builds The firming up of property prices reflects the growing economic strength of India, now among the world s largest economies. However, rising prices also point to increasing pressure on middle-income homebuyers. Experts note that maintaining a balance between growth and affordability is essential for the long-term health of the real estate sector. Recent policy measures such as enhanced tax benefits and softer interest rates are expected to provide some relief, though global uncertainties and rising input costs could pose challenges ahead. Growing Preference for Larger Homes Alongside price appreciation, buyer preferences are clearly shifting toward larger living spaces. The configuration-wise housing index for December shows that 3BHK homes recorded a reading of 141 , reflecting a notable rise over the year. In contrast, the index for 1BHK units declined to 117 , indicating weaker demand for smaller, budget-oriented homes. This divergence suggests that buyers are prioritising space, comfort, and long-term usability possibly influenced by lifestyle changes, remote work trends, and higher disposable incomes among affluent households. Conclusion India s residential real estate market is being reshaped by rising wealth, evolving buyer preferences, and sustained demand for premium housing. While this trend underlines economic progress, ensuring affordability for a broader section of buyers will be critical to achieving balanced and inclusive growth in the years ahead.