Despite price pressure, urbanisation & income growth driving housing demand in India: Report

New Delhi [India], October 13 : Urbanisation and rising household incomes continue to sustain housing demand in India, even amid increasing property prices in key cities such as Bengaluru and the National Capital Region (NCR), according to a report by PL Capital.

The report highlighted that higher disposable incomes, coupled with potential interest rate cuts, are expected to maintain activity in the housing market over the long term.

While affordable and mid-income housing continues to form the backbone of demand, luxury housing is also witnessing strong momentum in wealthier markets, driven by high-net-worth individuals and foreign investors.

Following a strong surge in residential and commercial real estate in 2024, with notable price gains in select cities and premium segments, residential prices are anticipated to stabilize in 2025 while continuing to record steady gains.

It stated "Urbanisation, income growth sustains housing demand despite affordability pressures. Rising household incomes and potential interest rate cuts should sustain market activity over the long term".

The report also mentioned that the 2025 real estate demand is being shaped by a combination of global and local factors, with residential properties remaining dominant. Sustainability and green building practices are increasingly influencing buyer preferences, with environmentally friendly and energy-efficient properties commanding premiums.

"By FY26, the market is likely to reach a balanced state, favouring credible developers, prime projects, and healthy absorption, with robust sales, barring major global disruptions," the report noted.

Housing demand is expected to strengthen in key locations, supported by record new launches and rising supply.

Despite low rental yields, ownership demand surged, aided by structural reforms and improved transparency.

The sector's increasing emphasis on sustainability, professional practices, and investor participation signals a marked shift from its historically fragmented past.

As urbanisation continues and household incomes rise, the report suggested that India's real estate sector is set for sustained growth, offering opportunities for developers and buyers alike, while also encouraging responsible and sustainable development practices.

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