India Home prices to rise steadily, affordable housing supply to lag demand

Average home prices in India are expected to rise steadily over the next few years as the country's rich drive up demand for luxury housing, according to property experts polled by Reuters who also said there would be a shortage of affordable homes.  Home purchases are increasingly driven by a select few in a country of more than 1.4 billion people, mostly those unaffected by higher interest rates. Economic growth in Asia's third-largest economy is expected to continue outpacing its major peers, driving demand for housing, even though economists argue the benefits of that growth are being skewed more towards the upper classes. Average home prices are forecast to rise around 6% this year and next, slightly below the 7% expected in a March poll, according to the median forecast from a May 10-29 survey of 15 property market experts. House prices rose 4.3% in 2023, according to Reuters calculations based on the Reserve Bank of India's House Price Index. The RBI https://www.india.gov.in/official-website-reserve-bank-india, which raised interest rates by 250 basis points between May 2022 and February 2023 to cool inflation, is broadly expected to cut them next quarter, although a stable rupee and a strong economy leaves the central bank with little incentive to act.  Despite government initiatives to build affordable homes, a strong majority of respondents, 12 of 15, said demand would not be met over the next two to three years. The other three forecast excess supply.

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