Rising home prices: Consider outskirts, in-progress projects

But be mindful of the potential drawbacks of these options and make balanced choices

- SANJAY KUMAR SINGH & KARTHIK JEROME

India's residential real estate market is witnessing a remarkable surge. According to data from real estate consultancy Anarock, property prices across the top seven cities have risen by an impressive 46 per cent between the third quarter of 2021 and 2024. The past year alone has seen an average price increase of 23 per cent.

Key drivers behind rising prices

Several factors are fuelling this upward trend. "The price growth is mainly due to an increase in the prices of construction raw materials and an overall rise in demand," says Santhosh Kumar, vice chairman, Anarock Group.

Steady income growth over the past three years has also given buyers the confidence to invest in property. "It is providing households with the comfort to commit to a big-ticket purchase like a house," says Vivek Rathi, national director of research, Knight Frank India.

While recent price hikes may appear sharp, they are more moderate when viewed over a longer period. "Over a 7-10-year period, property prices have grown at an annualised rate of 6-8 per cent," says Vikas Wadhawan, group chief financial officer, Housing.com and Proptiger.com. He notes that property prices tend to increase in spurts rather than steadily. "This time, prices had paused for a longer while, which is why the increase in the past few quarters has been sharper," adds Wadhawan.

Kumar further points out that structural changes in the Indian real estate sector-such as demonetisation and the introduction of the Real Estate Regulatory Authority Act, 2016 (Rera)-had kept prices stagnant, making the recent surge overdue.