Home prices are rising faster than salaries:Is owning a house becoming impossible in India?

For millions of middle-class families in India, buying a home has long been the ultimate financial goal. However, buying a house is becoming harder as property prices continue to rise faster than salaries. Is homeownership becoming impossible in India? How can buyers navigate this challenging market? Let’s see what real estate and finance experts have to say. Big Picture: Salary Growth vs Home Price Hike Since 2014 The gap between income growth and real estate prices has widened significantly over the past decade across major Indian cities. Salary Growth Since 2014: According to annual compensation reports by global HR consultancy Aon India, corporate salaries in India have grown at an average rate of 8% to 10% per year since 2014. Home Price Surge Since 2014: Data from the Reserve Bank of India’s (RBI) All-India Housing Price Index shows that average property prices in major cities have surged by 70% to over 120% since 2014. In top metro hubs, land and home prices have more than doubled during the same period. Home Loan Borrowers in India: According to credit bureau reports from CRIF High Mark, approximately 1.5 crore to 2 crore people in India currently hold active home loans. Why have home prices skyrocketed? Industry reports from market research firms like PropTiger and JLL India highlight four main reasons behind the sharp rise in home prices: Rising Construction Costs: High prices of raw materials such as steel, cement, and skilled labor. Expensive Land: Land values in metro cities and developing outer areas have reached record highs. Shift to Bigger Homes: Post-pandemic demand shifted heavily toward larger, luxury apartments, pushing average prices up. A shift towards luxury homes Vijay Raundal, Director at Teerth Realties, warns that the housing market is reaching a critical limit on affordability. “According to market research firm ANAROCK, average home prices in the top seven Indian cities rose by 8% in 2025, while actual home sales fell by 14%. Surprisingly, the total money spent on buying homes still grew by 6%. This shows that the market is focusing more on selling expensive homes rather than making homeownership accessible to average buyers.” -Vijay Raundal, Director at Teerth Realties Raundal notes that a housing market relying mostly on wealthy buyers is unhealthy. Salaried employees should not be forced to spend a huge chunk of their salary just to live far away from their workplaces. He emphasizes that property developers must do more than offer simple discount deals, and urges government planners to improve urban infrastructure. Middle-class EMI burden on the rise Hardik Shah, Director at Shyam Group – Dholera SIR, highlights findings from Knight Frank’s 2025 Affordable Housing Report to show how difficult the situation has become for middle-class families. “The Knight Frank report shows that the EMI-to-income ratio for middle-income families rose from 28% in 2020 to 40% in 2025. For economically weaker families, this burden reached 60% of their total income.” -Hardik Shah, Director at Shyam Group Shah points out that when home prices get this high, buyers are forced to make tough choices: Shah adds that homeownership is becoming uneven. To fix this, India needs faster government project approvals, lower construction costs, and better infrastructure in outer city areas so peripheral housing becomes genuinely livable. How can first-time buyers still buy a home safely? While the challenges are clear, Vishal Valecha, Chief Operating Officer at Easy Home Finance Limited, stresses that homeownership is not impossible—it just requires a different approach than previous generations used. “Property prices climbing faster than salaries is an issue that has been building for over ten years in cities like Mumbai, Delhi-NCR, and Bengaluru. However, ownership is still achievable if buyers adapt their financial strategy,” says Valecha. -Vishal Valecha, Chief Operating Officer at Easy Home Finance Limited Valecha recommends several practical steps for buyers: Be Flexible with Location: Waiting for prices to drop rarely works because land costs do not go down. Instead, look at emerging neighborhoods along new metro lines, expressways, and outer hubs like Thane, Navi Mumbai, or NCR growth belts. Cap Your Loan EMIs: A home loan EMI should never exceed 35% of your net monthly salary. Your total combined EMIs (including car loans and credit cards) must stay under 40%. Test Your Budget for Interest Rate Hikes: Before taking a loan, test your household budget against a possible 2% interest rate hike to make sure you will not run into financial trouble later. Consider Joint Ownership: Co-buying a property with a spouse or family member boosts your loan eligibility and splits the repayment burden. Keep Extra Cash for Extra Costs: Always keep an extra 10% to 15% of the home value saved up for non-financed costs like stamp duty, registration fees, and initial house setup. Use Government Benefits: Government programs like the Pradhan Mantri Awas Yojana (PMAY) and state stamp duty discounts offer real savings, but many buyers miss out due to lack of awareness.