Investing in real estate is hardly a lucrative bet now
The Reserve Bank of India’s House Price Index, which tracks home prices in 10 Indian cities, shows that return from owning housing real estate has plunged dramatically. The average return from owning real estate over the last decade has been 11.6% per year. Mint explores.
The Reserve Bank of India’s House Price Index, which tracks home prices in 10 Indian cities, shows that return from owning housing real estate has plunged dramatically. The average return from owning real estate over the last decade has been 11.6% per year. Mint explores.
How have the returns been since 2015?
A bulk of the returns from owning homes over the last decade was earned between June 2010 and June 2015. Subsequently, the returns between June 2015 and June 2020 have been subdued at 5.5% per year. Delhi has been the worst performing city during this period with a return of 1.5% per year. Kolkata was the second worst performing city with a return of 3.2% per year. This is a clear indication that the returns from investing in real estate in these cities were front-loaded during the last decade. However, the Index only captures the formal aspect of returns on housing real estate.
We have data pertaining to a full decade for the House Price Index for the first time, from June 2010 to June 2020. The average per year return during this period stands at 11.6% per year. It is important to note that this is the average all India return and the return varies across cities.
The best performing city among the 10 cities covered under the data is Lucknow with a return of 16.1% per year. Kolkata comes in next at 13.3% per year. Homes in Mumbai and Delhi delivered returns of 11.2% and 12.2%, respectively. Jaipur was at the bottom with a return of 6.1% per year.
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