Rising Property Prices Push Middle-Class Indians Toward Rentals

India’s housing market is experiencing a strong boom, but for many middle-class families, the dream of owning a home is becoming increasingly distant. Over the past decade, property prices in major cities have more than doubled, creating a growing affordability gap that continues to widen every year. While demand for premium and luxury housing remains robust, the segment catering to affordable buyers has struggled to keep pace.

According to a recent Reuters poll, average home prices are expected to rise by 6.3% this year and nearly 7% in 2026, following a 4% increase in 2024. Despite interest rate cuts by the Reserve Bank of India, the relief for buyers has been minimal. Property values have climbed so steeply that even reduced mortgage rates cannot offset high equated monthly installments (EMIs). As a result, the average age of homeownership in India’s urban centers has shifted from the early thirties to the mid-forties.

Experts warn that this affordability crisis could have far-reaching consequences. Families unable to purchase homes are turning toward rentals, creating additional pressure in rental markets. This shift also delays wealth creation, as property ownership is often considered a primary asset for middle-class households. The shortage of affordable housing, estimated at nearly 10 million homes, could triple by 2030 if the current trend continues, according to Knight Frank India.

Reports suggest that while unsold inventory in the affordable housing segment has declined, the luxury housing segment has seen a sharp surge in unsold stock, reflecting the mismatch between supply and demand. This imbalance highlights how India’s housing market is leaning more toward high-income buyers, leaving first-time homeowners struggling.

Unless affordable housing supply improves significantly, experts believe India’s rental market will continue to expand. For middle-class families, the dream of owning a home may remain on hold, making rentals the only practical option in the near future.