According to Magicbricks, residential demand has surged by 23.8% over the past three years, with property prices increasing by nearly 42.6% across major cities.
The Indian real estate market is currently experiencing a bull run, marked by soaring prices and escalating demand. At the same time, household incomes across the top 10 cities increased at a CAGR of 5.4%, while property prices surged at a CAGR of 9.3% (between 2020-2024). This growing gap in income and property price growth rates has weakened affordability.
Elaborating on the same, Magicbricks’ report revealed that the Property Price to Annual Household Income Ratio (P/I Ratio) in India has increased from 6.6 in 2020 to 7.5 in 2024 (higher than the globally accepted benchmarks of 5). Based on the P/I Ratio, the report observed that Chennai (5), Ahmedabad (5), and Kolkata (5) are among the most affordable cities for residential investments in 2024, while the Mumbai Metropolitan Region (14.3) and Delhi (10.1) emerged as the least affordable.
Explaining the trends, Sudhir Pai, CEO, Magicbricks shared "Between the latter half of 2021 and 2022, residential investments were at their most affordable. During this period, the market was experiencing a resurgence, characterized by low interest rates, recovering household incomes, and modest increase in residential prices. However, homeownership sentiment has since peaked, resulting in demand significantly outpacing available supply, leading to a rapid and substantial surge in residential prices, presenting new challenges for affordable housing.”
Furthermore, the report revealed that the EMI-to-monthly income ratio in India has risen from 46% in 2020 to 61% in 2024, indicating a growing burden of EMIs on home buyers and reflecting affordability concerns nationwide, especially metros. The trend is more pronounced in MMR (116%), New Delhi (82%), Gurugram (61%) and Hyderabad (61%). In contrast, cities like Ahmedabad (41%), Chennai (41%) and Kolkata (47%) are relatively more affordable.
The report concluded that the current situation is likely to hit equilibrium conditions with market trends indicating a deceleration in price growth due to an anticipated increase in residential supply.
