India’s real estate stays stable, but luxury housing inventory faces growing pressure.

Market Overall Stable, Prices Rising Moderately

According to the latest survey of 15 real estate analysts by Reuters, although the Indian housing market appears stable on the surface, cracks are beginning to show internally. Due to a slowdown in demand from high-end buyers, analysts expect luxury inventory to remain high or even continue to grow over the next two years.

The survey conducted between May 16 and June 6 shows that by 2024 home prices have increased by about 4%, with expectations of a 6% increase in 2025 and a 5% rise in 2026, indicating no significant downside risk to the market.

Central Bank Rate Cuts Struggle to Ease Credit Transmission Issues

Although the Reserve Bank of India recently unexpectedly cut the benchmark interest rate by 50 basis points to 5.50% to stimulate economic growth, previous easing policies have not effectively reduced bank lending rates, limiting the impact of monetary policy on the real estate market.

Some analysts noted that with weak urban consumption, high youth unemployment, and stagnant wage growth, the rate cuts have not translated into effective housing purchase momentum.

High-end Market Boom Fades, Luxury Inventory Becomes a Concern

The housing boom driven by the wealthy post-pandemic is gradually cooling, with sales data showing a marked decline. Pankaj Kapoor, Managing Director of Liases Foras, stated: "The peak buying period for ultra-high-net-worth individuals has passed. Although the wealthy still invest in real estate, the era of frenzied buying is over."

When asked about changes in high-end property inventory over the next two years, 6 out of the 15 respondents predicted an increase, 5 expected it to remain unchanged, and only 4 foresaw a decrease.

Kumar from Magicbricks noted: "Luxury supply has increased significantly, but demand has only slightly improved, indicating that inventory pressure in this segment will persist."

Uncertain Outlook for Essential Housing Market, Supply May Contract

In the affordable housing sector, 7 respondents predicted new home supply would decrease, 4 expected it to remain unchanged, while another 4 thought it would increase. Although some, like Anshuman Magazine from CBRE, believe recent tax cuts and interest rate adjustments might improve disposable income, assisting first-time homebuyers' affordability, the overall market performance remains weak.

Colliers, Magicbricks, and Savills hold a pessimistic view on the affordability for first-time homebuyers over the next year, concerned about the persistently high threshold for purchasing homes.

No More Beautifying Real Estate Market Narratives

Kapoor warned that although current economic data looks promising, it cannot hide the real state of the real estate market: "We can't keep telling 'fairy tales'; upon closer inspection, cracks are everywhere. It's time investors recognize this slowdown is real and will spread across the entire real estate market."

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.