Homes in India are more affordable than ever

A major chunk of people residing in India can’t afford to buy a home, is the common misconception which has taken a firm grasp in the minds of most. But fortunately for one and all that are aspiring to buy their dream home either today or way ahead in the future, nothing can be further from the truth. If this statement was somehow miraculously true then real estate developers in India would surely be bankrupt.

India is a country where demand for affordable housing outstrips demand for every other kind of housing by miles, thus builders wouldn’t be able to survive with just luxury and high end realty projects. A developer’s portfolio strategically has to be a perfect amalgamation of both. On the plus side, it is absolutely true that prices of homes have risen in the past few years but the proportionate rise in income is way more than that of homes. So obviously, houses are not completely out of grasp for every Indian.

In fact, if we observe carefully then homes in India are more affordable than ever before. If we divide property prices with annual income of people, then we can gauge the affordability of homes in our great nation. In the year 2015, the ratio is 4.4. In the year 2005 the same ratio was 4.7. Though the reduction in this ratio is not mind blowing, but houses are more affordable now than what they were around a decade ago. In the year 1995 the ratio stood at a staggering 22. Compare this to the modest 4.4 and you will realize that Indian real estate has come a long way in the last two decades. So yes when the absolute value of homes is compared then housing is costlier but when actually an analysis is done, housing is more affordable than ever.

The reason why people think that prices of housing have sky rocketed and reached unaffordable proportions is because they compare the actual prices then and now, which should never be done. Buying a home now is way easier than what it was almost two decades ago. Not to forget the fact that home loans are now easily available and accessible from a torrent of NBFCs and commercial banks. Home loan rates have significantly dropped in recent times as well. 9.9 % is the new normal when comes to home loans lending rates. Cheaper and easier access to credit has and will continue to fuel the housing boom in the nation.

So when you add to this the fact that when you leave metro cities aside for a minute, prices of homes in all other smaller cities continue to be highly affordable even till now. Thus forget and bust the myth that gone are the days when people could afford a home in India and plan to buy your dream home now.