Kolkata to stay the most affordable city for home buyers in India
Times of India | 27 November 2024
12 Kolkata: Kolkata will continue to be the most affordable city for home buyers in 2025, a leading global commercial real estate and investment management company has stated in its latest report.
"India's residential real estate market is poised for an affordability shift in 2025 with a projected interest rate cut on the horizon. Despite a steady decline in affordability since 2022 due to price hikes and stagnant interest rates, most markets are anticipated to see improved affordability levels by 2025, except Delhi NCR and Bengaluru. This improvement is currently anticipated with predictions of a cumulative 50 basis point cut over the next few months. Mumbai and Pune are expected to approach optimal affordability levels by 2025, while Kolkata is set to maintain its status as the most affordable market," said Samantak Das, chief economist and head of research at JLL India.
Since 2011, home prices in Kolkata have increased by 40%, the lowest rise among the top seven markets in the country. By contrast, Hyderabad registered a 132% jump during this period, Bengaluru 116%, Delhi 98%, Pune 61%, Mumbai 59%, and Chennai 41%.
On the other hand, the annual household income level in Kolkata has grown by 153% since 2011, higher than Bengaluru's 149%, Delhi 139% and Chennai 128%. Only Mumbai, Pune, and Hyderabad have witnessed higher growth in household income during this period at 189%, 173% and 163% respectively.
What this also means is that the percentage rise in the average income of a household in Kolkata in the last 14 years has been around four times that of the percentage rise in property prices in the city. This is an indication that Kolkatans have been able to afford bigger homes or even a second house.
The residential market is currently experiencing a sustained bull run. This momentum has led to consecutive peaks in sales and an acceleration in project launches. Residential sales are expected to reach 3,05,000-3,10,000 units in 2024, with further growth expected in 2025, potentially creating a new peak at 3,40,000-3,50,000 units.
"A key factor in this positive outlook is the anticipated shift in monetary policy. The Reserve Bank of India (RBI) recently changed its stance from withdrawal of accommodation to neutral, setting the stage for a potential rate cut cycle. While a rate cut by end-2024 may not materialise, a total of 50 bps repo rate reduction and a complementary interest rate decline cycling through the economy over the next 12 months is a possibility. These cuts are expected to function as a catalyst improving affordability levels and supporting the continued momentum in the residential market," said Das.