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Why Property Prices are So High in India

India is a country with a diverse culture and a thriving economy. However, one of the biggest challenges for people living in India is the high property prices. Whether you are looking to buy or rent a property, the prices are prohibitively high in most parts of the country. This blog post will explore the reasons behind the high property prices in India and what steps can be taken to tackle this issue.

Reasons Behind High Property Prices in India

Population Growth

India has one of the fastest-growing populations in the world, and this has put immense pressure on the demand for housing. The population growth has created a huge demand for residential and commercial properties, leading to an increase in prices. According to the Census of India, the country’s population has grown by 17.6% over the last decade.

Increasing Urbanization

India is one of the fastest urbanizing countries in the world. As people migrate from rural areas to urban centers, the demand for residential properties in cities has surged. This has resulted in a considerable price hike in urban areas. With increasing urbanization, infrastructure development such as the construction of new roads, highways, and flyovers, is a huge challenge for the government, which has caused a halt in progressions.

Short Supply of Land

The short supply of land is another significant factor contributing to high property prices in India. The Urban Land Ceiling & Regulation (ULCRA) Act and various other laws and regulations have led to the scarcity of land in urban areas. Therefore, developers have to purchase land at exorbitant prices, forcing them to increase the properties’ prices considerably.


Inflation is yet another reason for the rise in property prices, in India. When inflation increases, the cost of construction materials like cement, steel rebars, bricks, sand etc. increase, which subsequently increases the cost of production of the property. Therefore, developers pass on the expense to the buyers, which results in a significant hike in property prices.

Foreign Investors

The Indian government has been promoting Foreign Direct Investment (FDI) in the real estate sector as a result; many foreign investors are investing in properties in India. These foreign investors are ready to pay a premium for properties in India, which has led to a rise in property prices.

Steps to Tackle High Property Prices in India

Government Intervention

The government’s intervention can be a significant factor in regulating the property prices in India. The government can impose stricter regulations on foreign investors and their investments in the Indian real estate market. Moreover, a simplified and more transparent real estate regulatory system could be implemented to make the real estate market more efficient and hence encouraging foreign investments.

Alternate Investments in Real Estate

Real estate investment trusts (REITs) can offer an alternate investment option and open up residential and commercial real estate to smaller investors. Through REITs, small investors can participate in diversified real estate portfolios and gain a share of the yields from rent and capital gains from sales. This will allow more liquidity in the market, which can lead to a reduction in property prices in the long run.

Property Tax

The implementation of property taxes is one potential solution that can be effective in curbing the increasing property prices in India. By introducing property taxes, the government provides revenue while discouraging speculation as well as reducing the demand for property thereby putting a curb on rising property prices.

Encourage Sustainable Development Project & Infrastructure

Encouraging sustainable development and investing in infrastructure to improve transportation connectivity, water, and power supply systems can lead to better living conditions outside of urban areas. Such developments can be encouraged through more flexible land acquisition policies and promoting public-private partnerships wherein the latter concentrates on providing opportunities in tier II and tier III cities.


The real estate market in India has witnessed tremendous growth in recent times. However, the increasing property prices remain a significant challenge for many Indians. The government needs to address this issue by regulating foreign investments in real estate, introducing property tax, encouraging sustainable development and infrastructure improvements. With the right interventions, India’s real estate market can be made more efficient and affordable for all.