New Delhi: A new report from an industry organisation suggests that people who live in India are increasingly priced out of buying a home on the affordable end of the market.
“The trend is very clear that the average price of a single-family house in India is rising faster than the average wage growth rate,” said Sandeep Singh, managing director of the Institute of National Planning and Urban Policy (INPUP).
According to the INPUP report, the average rent in India stood at Rs 6.3 lakh per month in February this year, a jump of almost 60 per cent from Rs 5.5 lakh in December 2016.
The median income per capita in India stands at Rs 40,000, according to the report.
The report also suggests that many of the people who are getting priced out from buying a house have lived in India for years, including those who are earning more than Rs 1 lakh a month.
While these people are being priced out, people who can afford to pay the premium for a property are buying properties at a rapid pace.
According to data from the Department of Statistics, real estate transactions in the country stood at $2.35 billion in the year to March, up from $1.5 billion in March 2016.
“We are seeing a sharp rise in the number of transactions and the total value of the transactions in real estate,” Singh said.
“The reason for this is that the market is getting saturated and demand for property has become very strong.”
According to a survey by BDO India, in the first three months of this year the average transaction value for properties valued at Rs 3 crore and over jumped by a whopping 70 per cent to Rs 3.7 crore.
According the INPA, India’s population is about 13.5 crore, and it is projected to reach over 27 crore by 2026.
“While the demand for housing is growing at a faster rate than the supply, we still need to ensure that we have enough supply to meet the demand and also keep prices affordable for the majority of the population,” Singh added.
The INPUS report also suggested that a large number of those buying properties are from lower-income households, many of whom are renting out the properties.
According TOI’s data, nearly 11 per cent of the houses bought in 2016-17 by people earning less than Rs 5 lakh per year were rented out by households with income of less than one lakh a year.
According a report by The Economist, this means that for a single person in India to buy an apartment at the current price of Rs 5 crore, he or she would have to live in a city for a minimum of five years.