After years of record-breaking growth in India’s property market, housing prices could be heading into a period of stagnation rather than a crash, according to investment banker Sarthak Ahuja.
In a LinkedIn post that has sparked wide discussion among homebuyers and real estate professionals, Ahuja questioned whether the country’s overheated housing market can sustain its current trajectory. “If house prices are so high that no one can afford to buy a house now, will the prices continue to rise, or will real estate prices crash?” he wrote.
Citing data from the past few years, Ahuja noted that housing prices in India have surged by nearly 10% annually since 2020, while average incomes have grown at only about 5% a year. This widening gap has pushed home affordability to record lows, especially in major urban markets such as Mumbai and Gurgaon, where buyers now require the equivalent of 20-30 years of income to afford a typical home.
Affordable housing vanishing
According to Ahuja, developers are increasingly shifting toward ultra-luxury housing projects to maximise profits and cater to high-end buyers who are less sensitive to price fluctuations. As a result, affordable housing inventory has plummeted – by 70% in Hyderabad, 60% in Mumbai, and 50% in the National Capital Region (NCR) over the past two years.
This shift, he said, has coincided with a surge in institutional investment in Indian real estate. In 2024 alone, the sector attracted around $9 billion, marking a 50% jump over 2023, with foreign investors accounting for 63% of that figure.
Demand slowdown but no price crash
Despite the boom in investment, Ahuja observed that sales volumes for developers have dropped sharply in the past six months. Yet, prices have remained stable, defying expectations of a correction. The resilience, he explained, stems from the nature of property ownership in India’s high-end market-many units are held by non-resident Indians (NRIs), foreign institutional investors, or ultra-wealthy buyers who are not under pressure to sell.
“House prices have never crashed in India on average,” Ahuja wrote. “I’m expecting there to be a multi-year stagnation in price where for the next 2-3 years, you shouldn’t buy in panic that prices will go up.”
‘Buyers now have the upper hand’
While affordability remains stretched, Ahuja suggested that the current slowdown could favour serious homebuyers. “Today, you kind of have an upper hand in negotiating with developers because a number of them are desperate to meet their sales targets,” he said.
With India facing a housing shortfall of 10 million homes, projected to swell to 30 million over the next decade, the long-term demand remains strong. But in the short term, Ahuja believes the market will see a pause rather than a plunge – a phase of stability and buyer leverage after years of relentless price escalation.