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Despite declining affordability from 2022 onwards due to year-on-year (YoY) price increases and stagnant interest rates, most markets, barring Delhi-NCR and Bengaluru, see improved levels of affordability by 2025. There is hope, JLL said 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)
According to JLL’s Home Purchase Affordability Index (HPAI), home affordability is expected to improve over the next 12 months with an expected interest rate cut on the horizon. It added that Mumbai is on track to approach the maximum tolerable level in 2025.
“Despite a decline in year-on-year (YoY) affordability from 2022 onward due to rising prices and stagnant interest rates, most markets, except Delhi-NCR and Bengaluru, see improved levels of affordability by 2025. This improvement is currently expected with a total of 50 basis point cuts forecast over the next few months,” JLL said in its report.
Mumbai is on track to approach maximum affordability in 2025. HPAI levels are likely to improve but remain below peak values in Delhi-NCR and southern markets. It added that Kolkata is the most affordable housing market in India among the top seven cities and will maintain its position through 2024 and 2025 while likely to touch new affordability peaks next year.
Samanthik Das, Chief Economist and Head of Research & REIS, India, JLL, said, “While domestic economic forecasts indicate some softening in growth, India is still the best performing major economy globally. , which supports rising household incomes. JLL’s HPAI shows that while 2021 saw high affordability, rising prices and sticky interest rates. lead to lower levels of unemployment by 2022 and 2023.”
With expected interest rate cuts, moderate price growth and continued income growth, the next 12-18 months is expected to create a favorable home buying environment for all cities, barring Bengaluru. Affordability levels will be improved to be the best from 2022 onwards. and Delhi NCR. Das added that even in these two cities, affordability will be better than the 2023 level.
With 2011 as the base year, Hyderabad leads the way in prices with a 132 percent increase, followed by Bengaluru at 116 percent and Delhi-NCR at 98 percent. On the income front, Mumbai has seen the highest growth of 189 per cent, with Pune and Hyderabad growing at 173 per cent and 163 per cent respectively during the same period.
Shivan Suraj, founder and director of Infra Mantra, a Gurugram-based property consulting firm, said, “The rise in property prices has not kept pace with the rise in income in Delhi-NCR, and this has affected affordability in this market. The price points at which new supply is coming into this market may not be affected by a modest rate cut. Delhi-NCR is an optimistic market with huge changes in infrastructure and connectivity to cities like Noida and Gurugram. Coming to see Due to which the prices are increasing.
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, possibly setting a new peak at 340,000-350,000 units, the report said. will
Vijay Harsh Jha, founder and CEO of Gurugram-based property brokerage firm VS Realtors (I) Pvt Ltd said, “House sales will witness record year-on-year growth in all markets and particularly in NCR. The infrastructure in and around the base is boosting property in Noida which has been playing catch up for years. Gurugram is emerging as an exciting city to not only run offices but also work in has become a matter of pride. As a result, new micro-markets are coming up and demand is increasing.”
The report emphasizes that actively managing affordability levels through policy interventions and improvements in household income will be key to maintaining demand elasticity, even in a positive price growth environment.