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Despite year-on-year (YoY) decline in affordability since 2022 due to price hikes and stagnant interest rates, most markets are anticipated to see improved affordability levels by 2025, except for Delhi-NCR and Bengaluru, says JLL in its report.
Residential sales are expected to reach an impressive 3,05,000-3,10,000 units by the end of 2024, with further growth expected in 2025. (Representative image)
Home affordability is expected to improve in the next 12 months with a projected interest rate cut on the horizon, according to JLL’s Home Purchase Affordability Index (HPAI). It added that Mumbai is on its way to reaching close to optimal affordability levels in 2025.
“Despite year-on-year (YoY) decline in affordability since 2022 due to price hikes and stagnant interest rates, most markets are anticipated to see improved affordability levels by 2025, except for Delhi-NCR and Bengaluru. This improvement is currently anticipated with predictions of a cumulative 50 basis point cut over the next few months,” JLL said in its report.
Mumbai is on its way to reaching close to optimal affordability levels in 2025. HPAI levels are likely to improve but remain lower than peak values in Delhi-NCR and southern markets. Kolkata remains the most affordable residential market in India among the top seven cities and will maintain its status through 2024 and 2025 while likely hitting new affordability peaks next year, it added.
Samantak Das, chief economist and head of research & REIS, India, JLL, said, “While domestic economic forecasts indicate some softness in growth, India is still projected to be the best-performing large economy globally, supporting household income growth. JLL’s HPAI shows that while 2021 saw peak affordability across all markets, rising prices and sticky interest rates caused affordability levels to dip through 2022 and 2023.”
The anticipated interest rate reduction, combined with moderate price growth and sustained income increases, are expected to create a conducive environment for home purchases over the next 12-18 months with affordability levels set to improve to their best since 2022 for all cities, barring Bengaluru and Delhi NCR. Even in these two cities, affordability will be better than 2023 levels, Das added.
With 2011 as the base year, Hyderabad leads in price growth with a 132 per cent increase, followed by Bengaluru at 116 per cent and Delhi-NCR at 98 per cent. On the income front, Mumbai has seen the highest growth at 189 per cent, with Pune and Hyderabad following at 173 per cent and 163 per cent, respectively, over the same period.
Shiwang Suraj, founder and director of Gurugram-based property consulting firm InfraMantra, said, “The growth in property prices is not in sync with the growth in income in Delhi-NCR, and that has hit the affordability in this market. The price points at which new supply is coming into this market may not be affected by minor rate cuts. Delhi-NCR is an aspirational market with cities like Noida and Gurugram witnessing a huge transformation in infrastructure and connectivity which are driving up prices.”
Residential sales are expected to reach an impressive 3,05,000-3,10,000 units by the end of 2024, with further growth expected in 2025, potentially creating a new peak at 340,000-350,000 units, the report said.
Gurugram-based property brokerage firm VS Realtors (I) Pvt Ltd founder and CEO Vijay Harsh Jha said, “Housing sales will continue to see record y-o-y growth across all markets and particularly NCR. The Noida International Airport and the infrastructure around it are triggering a property boom in Noida which is playing catch up for the lost years. Gurugram is evolving as an aspirational city where not just operating offices but also working in them has become a matter of pride. As a result of this, new micro markets are coming up and seeing heightened demand.”
The report emphasises that actively managing affordability levels through policy interventions and improvements in household incomes will be key to sustaining demand elasticity, even in a positive price growth environment.
