From 1947 to 2024: How India’s housing market has transformed over 77 years

Post-independence housing evolution: Since India gained independence in 1947, the housing sector has undergone transformation. From addressing post-colonial challenges to embracing modern urbanisation and technological advancements, the Indian real estate market has evolved.

Early challenges and initial developments (1947-1970s)

In the immediate aftermath of independence, India faced considerable challenges in the housing sector. The partition had left a shortage of housing and infrastructure, compounded by a nascent economy struggling to address basic needs. During this period, housing was relatively affordable in rural areas and smaller towns, though urban areas started experiencing pressure due to increased migration.

Key developments

One of the seminal developments in India's post-independence real estate landscape was the construction of Chandigarh, envisioned as a modern, efficient urban hub and designed by the renowned architect Le Corbusier. This project not only symbolised a new era in urban planning but also set a precedent for future developments.

Alongside this, the establishment of industrial estates in key cities such as Kanpur, Mumbai, Delhi, and Ahmedabad played a crucial role in attracting foreign investment and generating employment, thereby fueling economic growth and escalating real estate demand. Additionally, the burgeoning tourism industry catalysed the need for hotels and resorts, further expanding the early real estate market. Collectively, these initiatives marked milestones in shaping India's real estate sector.

Liberalisation and boom (1980s-1990s)

The 1980s and 1990s were pivotal in reshaping the Indian real estate sector. The economic liberalisation of the 1990s, under Prime Minister PV Narasimha Rao, catalysed changes:

Economic liberalisation The opening up of the economy led to increased foreign investment, resulting in the construction of skyscrapers, shopping malls, and commercial developments. The middle class expanded rapidly, boosting demand for both residential and commercial properties.

Urbanisation With growing urbanisation, cities saw a surge in housing demand. The construction of gated communities and apartment complexes became common, reflecting the changing needs and aspirations of the Indian population.

How have housing prices evolved?

Real estate experts  LC Mittal, Director, Motia Group and Anurag Goel, Director of Goel Ganga Developments have observed that since India’s independence in 1947, housing prices have undergone substantial changes, influenced by economic growth, urbanisation, and policy shifts. 

Initially, in the 1950s and 1960s, housing was relatively affordable, with modest city homes costing between Rs 5 thousand to Rs 15 thousand. By the 1970s, prices for basic urban housing ranged from Rs 15 thousand to Rs 50 thousand.

The 1980s saw prices for affordable housing rise to between Rs 50 thousand and Rs 2 lakh and by the 1990s, this range increased to Rs 2 lakh to Rs 10 lakh. In the 2000s, major cities experienced prices from Rs 10 lakh to Rs 40 lakh, while the 2010s saw ranges between Rs 40 lakh and Rs 80 lakh. 

Currently, in the 2020s, affordable housing in metropolitan areas is often priced between Rs 50 lakh and Rs 1 crore, with smaller cities seeing prices from Rs 30 lakh to Rs 60 lakh.

Luxury housing, on the other hand, was initially rare and costly, with high-end properties in 1947 costing between Rs 50 thousand and Rs 2 lakh. By the 1970s, these prices ranged from Rs 2 lakh to Rs 6 lakh. 

The 1980s saw a rise to Rs 6 lakh to Rs 10 lakh, and the 1990s expanded this range to Rs 10 lakh to Rs 20 lakh. In the 2000s, luxury properties were priced from Rs 70 lakh to Rs 1 crore, while the 2010s saw ranges from Rs 1 crore to Rs 5 crore, with some properties exceeding this. 

In the 2020s, luxury housing can range from Rs 2 crore to Rs 50 crore or more in major cities, with high-end properties often surpassing Rs 100 crore.

What are the key housing trends now?

Homebuyers are increasingly gravitating towards larger, more luxurious spaces, particularly 3BHK apartments, which have become a prevalent trend. Recent surveys reveal that nearly 50 per cent of prospective buyers are now prioritising spacious 3BHKs, while interest in luxury homes priced over Rs 1.5 crore has nearly doubled since 2021. Features like balconies, premium amenities, and expansive living areas are now top priorities.

Despite this luxury boom, affordable housing, once a market cornerstone, is experiencing a decline. Real estate veteran Niranjan Hiranandani highlighted that while the allure of luxury housing is strong, affordable housing remains the backbone.

The demand for affordable housing has decreased from 40 per cent in 2020 to just 21 per cent in 2023. However, Hiranandani anticipates a rebound in the sector within the next 1-2 years, as a significant portion of the population still depends on affordable housing.

"In the aftermath of COVID, the demand for affordable housing has waned as the market becomes more aspirational. Nevertheless, affordable housing is likely to recover soon, given its critical role for a large segment of the country," Hiranandani told Republic Business.

Pre-pandemic trends

From 2013 to 2019, the real estate market experienced a shift in demand. Affordable housing rose from approximately 30 per cent of new launches in 2013 to nearly 40 per cent by 2019, while luxury projects decreased from around 20 per cent to just 10 per cent. This transition was largely influenced by government initiatives like 'Housing for All' and the expanding urban middle class. Affordable housing grew at a compounded annual growth rate (CAGR) of 8-10 per cent, compared to 3-5 per cent for luxury housing.

LC Mittal of Motia Group said that the share of affordable housing surged from 25 per cent of total demand in 2013 to nearly 45 per cent before the pandemic, driven by policies such as PMAY and the urban middle class's expansion. However, the trend is shifting back towards luxury homes as of 2023 and 2024.

What’s influencing housing trends?

Urbanisation and population growth: India's urban population increased from 31 per cent in 2011 to about 35 per cent in 2021. The migration from rural to urban areas has heightened the demand for city housing. LC Mittal emphasised that this shift has intensified demand for both urban and peripheral housing.

Government policies: The Real Estate (Regulation and Development) Act (RERA) 2016 and Goods and Services Tax (GST) 2017 have introduced greater transparency and standardisation. Goel from Goel Ganga Developments highlighted that these policies have boosted a focus on affordable housing.

Lifestyle changes and technological advancements: The rise of nuclear families and the demand for home offices due to the COVID-19 pandemic have increased the need for larger, more flexible living spaces. Advances in technology have also driven demand for smart homes.

Several reforms have influenced trends

• RERA 2016: Introduced checks and balances, enhancing transparency and buyer confidence.
• GST 2017: Standardised real estate taxation and reduced market disturbances.
• Housing for All by 2022: Provided subsidies and incentives for affordable housing.
• Insolvency and Bankruptcy Code (IBC) 2016: Facilitated the resolution of stressed real estate assets.

Consumer preferences and income levels

Rising income levels and evolving consumer preferences have influenced the market. Per capita GDP increased from $1,450 in 2013 to $2,256 in 2023, boosting the middle class's purchasing power. This growth has led to increased demand for larger homes with better amenities. The average size of affordable homes has expanded from 500-600 sq ft in 2013 to 600-750 sq ft in 2023.

Integrated townships with work-life balance features are gaining popularity, especially in tier-2 cities. Smart home technologies and eco-friendly options are also in demand, with 20 per cent of urban buyers prioritising smart features and 15 per cent opting for green buildings.

The Indian housing market has come a long way since independence, evolving from post-colonial challenges to a dynamic, modern sector. With continued growth driven by economic development, urbanisation, and policy reforms, the future of housing in India holds promise.

Source: Republicbiz