India's Real Estate Market: Renewed Affordability Amidst Rate Cuts

India's residential real estate market sees potential affordability improvements led by expected interest rate reductions by the Reserve Bank of India. The report by JLL predicts favorable conditions for homebuyers with increased affordability across most cities, except for Delhi NCR and Bengaluru, by 2025.

The Indian residential real estate market is poised for a shift towards increased affordability due to anticipated interest rate cuts from the Reserve Bank of India, a report by JLL suggests. A strategic cumulative rate cut of 50 basis points is expected to ease the financial burdens of homebuyers, countering the challenges posed by stagnant interest rates and escalating property prices since 2022.

The JLL Home Purchase Affordability Index forecasts notable affordability improvements across most housing markets by 2025, excluding Delhi NCR and Bengaluru. Kolkata is expected to retain its position as the country's most affordable market, while cities like Mumbai and Pune are projected to near optimal affordability levels.

The report highlights a bullish trajectory in the residential market, fueled by evolving homeownership trends. This has resulted in successive sales peaks and accelerated project launches, with residential sales anticipated to hit 305,000-310,000 units in 2024, potentially reaching new heights of 340,000-350,000 units in 2025. Despite uncertainty over specific timing, the 50 bps rate cut is expected to reduce borrowing costs, benefiting both homebuyers and developers. Dr. Samantak Das of JLL emphasizes the role of income growth complementing these financial adjustments, driving market activity forward.

(With inputs from agencies.)