India’s luxury housing market is booming as the number of high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) continues to grow. With an impressive 12% compound annual growth rate (CAGR) in wealthy individuals, the demand for premium properties is outpacing affordable housing sales, according to the latest All-India Housing Price Index 2024.
Housing prices show upward trend
The Housing Price Index (HPI), a joint initiative by Housing.com and the Indian School of Business (ISB), reveals that average property prices in India’s major cities have increased significantly. In December 2024, the all-India HPI stood at 129 points, marking a four-point rise since January. However, this growth is slightly lower than in 2023 when the index peaked at 132 points.
Most cities recorded positive price movements, with the National Capital Region (NCR) leading the surge at 195 points, reflecting a strong demand for real estate. Key investment zones like Dwarka Expressway, Sohna, and Noida Extension remain highly sought after, driven by infrastructure development and rising equity inflows.
Bengaluru and Hyderabad, both major IT hubs, secured the second and third spots on the index, highlighting their growing commercial appeal.
Demand shifts to larger homes
With property prices firming up, the market is witnessing a growing preference for spacious homes. The index for 3BHK homes jumped 11 points to reach 141, while demand for 1BHK properties declined, with the index dropping from 123 to 117 over the same period.
“The latest data confirms a shift in buyer preferences towards larger, premium homes. While prices have stabilised in the final quarter of 2024, the demand for compact homes remains sluggish,” noted Shekhar Tomar, Assistant Professor of Economics and Public Policy at ISB.
Challenges and future outlook
While the rise in luxury housing signals economic growth, concerns over affordability persist. Middle-class homebuyers are increasingly burdened by rising property costs. However, recent policy measures, including better tax incentives introduced in the Union Budget 2025-26 and lower interest rates, aim to balance the market.
“Price appreciation tells a story of economic progress, but affordability remains a challenge,” said Dhruv Agarwala, Group CEO of Housing.com and PropTiger.com. “Geopolitical factors may further pressure input costs, impacting future price trends.”
With the Indian real estate market evolving rapidly, stakeholders will need to navigate price fluctuations while ensuring affordability remains a priority.
