RBI: Home price index rises by 4.3% amid high interest rates, inflation

Last Updated04/12/2024

The All-India Home Price Index (HPI) of the Reserve Bank of India rose by 4.34 per cent to 322 as of September 2024 as against 308.6 in September 2023, indicating that price rise is continuing across the metros, according to Reserve Bank of India data.

Despite high interest rates and inflation, India's housing market is experiencing continued price increases. According to the Reserve Bank of India (RBI) data, the All-India Home Price Index (HPI) rose by 4.34% in September 2024, reaching 322, compared to 308.6 in September 2023. This surge marks a significant 67% increase in HPI over the last decade, reflecting ongoing demand, despite challenging economic conditions.

National Price Growth:
- The All-India HPI increased by 4.34% year-on-year in September 2024.
- On a quarter-on-quarter basis, the HPI saw a slight dip of 0.1%, but certain cities continued to record positive growth.
Regional Variations:
- Top Performers: Bengaluru experienced the highest growth, with an 8.76% increase, followed by Delhi (3.31%) and Mumbai (2.95%).
- Decline in Kanpur: Kanpur was the only major city to show a decrease, with a 2.0% drop in prices.
Price Increase Across Major Cities:
- Delhi NCR led with a 32% year-on-year increase, followed by Bengaluru at 24%. The average housing price across the top eight cities rose by 11% year-on-year in Q3 2024, reaching ₹11,000 per sq ft.

Positive Market Sentiment:
- A combination of sturdy demand and favorable market conditions, including an expanding middle class and consumer preference for larger homes, is driving the price rise.
Inventory Trends:
- Unsold inventory has decreased for the third consecutive quarter, indicating strong sales momentum. However, the unsold inventory still remains high, with over 10 lakh units across eight major cities, particularly concentrated in the Mumbai Metropolitan Region (MMR).
Developers’ Strategy:
- Developers are recalibrating their offerings by focusing on compact, price-sensitive units while still catering to aspirational homebuyers seeking larger properties.

Stabilization in Demand:
- After two years of record-high sales, demand across major cities is stabilizing. Despite this, the housing market is expected to maintain healthy activity through the end of 2024, buoyed by positive consumer sentiment.
Expectations for Rate Cuts:
- The possibility of future repo rate cuts could provide financial relief to homebuyers, contributing to further market stability. Flexible payment plans and developer incentives will continue to aid in maintaining residential sales momentum.
Long-Term Outlook:
- The residential market is expected to stay robust, with developers adapting to the evolving market by offering affordable housing options and responding to the rising demand for spacious homes.