As Home Prices Rise, Is Homeownership Slipping Out Of Reach for Indians?

A decade ago, many middle-class families believed that if they worked hard, saved diligently, and took a home loan, owning a house in a major Indian city was an achievable goal. Today, that calculation feels very different.

Across cities such as Mumbai, Delhi-NCR, Bengaluru and Hyderabad, home prices have surged far faster than most salaries. For many young professionals and first-time buyers, the question is no longer which home to buy, but whether buying one is realistic at all without committing a large part of their income to EMIs for the next two or three decades.

The concern isn’t new, but has led to a viral debate on social media this week after one finance creator called out property influencers for saying Indian homes are easily affordable for the common man. His point was simple - home buying is probably a good investment but saying that it’s easily affordable is sugar-coating the stress buyers and their families face when buying a home today.

It has struck a chord with viewers as the debate encapsulates the truth many see playing out in India’s housing markets - while buyers struggle with increasing property prices, higher loans and living expenses, developers tout high demand, favourable loan conditions and aspirational living as reasons to buy.

So, has housing really become less affordable? How much of the price rise is being driven by investors? And what would it take to make homeownership easier for first-time buyers without slowing the momentum of India's real estate sector?

Is Homeownership Getting Harder?

Experts suggest that housing affordability has deteriorated in large metro cities over the last decade. Although income levels have risen and mortgage finance has eased, housing prices in metros like Mumbai, Bengaluru, NCR etc have outpaced income growth in the last few years.

“Higher construction costs and strong housing demand have further contributed to price appreciation. Although affordability remains better than in some previous real estate cycles due to improved financing options, first-time homebuyers today face a greater challenge in bridging the gap between income growth and housing costs,” says Kanika Gupta Shori, COO and Co-Founder, Square Yards.

Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd, says that India's housing sector has witnessed strong demand over the past decade, driven by the availability of home loans at attractive interest rates, rising disposable incomes, and evolving aspirations among homebuyers.

“Today, buyers seek spacious homes equipped with world-class amenities and excellent connectivity. Property prices have witnessed a significant increase due to the rising costs of land and construction. However, affordability has not necessarily deteriorated; rather greater participation of families with dual income, and improved access to housing finance has enhanced the purchasing power of homebuyers,” he adds.

Are Investors Driving Home Prices?

Demand from investors is boosting residential price growth, especially in high-potential micro-markets in cities like Mumbai, Delhi-NCR, Bengaluru, and Hyderabad.

End user demand, infrastructure, income growth and desire for bigger, quality homes are equally important. This time around, there is much more underlying strength and transparency in the market than there was during the earlier speculative boom.

How Much Do You Need to Earn to Buy a Home?

Experts say a comfortable property purchase will require expenses of between 30 per cent and 40 per cent of total income. “Taking into account the present-day situation, a middle-class family would need a household income of around Rs 1.5 - 2 lakh per month in Delhi-NCR and Hyderabad, Rs 2 - 2.5 lakh per month in Bangalore, and more than Rs 3 lakh per month in Mumbai. The exact requirement depends on location, property size, and financing structure, but affordability challenges have clearly increased across India's leading residential markets,” informs Shori.

How Can Homeownership Be Made Easier?

To make homeownership more accessible, certain policy and supply-side interventions are required. “For instance, tax incentives for home loans, speeding up approvals, and encouraging the development of homes suitable for middle and affordable-income groups will play an important role in making homeownership affordable,” says Shori, adding that infrastructure investments will be just as important, as they will create new residential corridors with relatively easy access.

Aggarwal says that to further improve housing opportunities for first-time homebuyers, policy measures should focus on rationalising transaction costs and stamp duty, expanding incentives for homebuyers and accelerating infrastructure development in emerging micro-markets.

“Additionally, faster regulatory approvals, adoption of modern construction technologies, and easier access to financing for developers can help contain costs and improve affordability over the long term,” he adds.