Buying a home is becoming increasingly difficult for India’s middle class—not because salaries have stagnated, but because asset prices have raced far ahead of income growth over the past three decades, according to market observers and recent data.
Hedge fund manager and financial educator Akshat Shrivastava, founder of Wisdom Hatch, recently highlighted how the gap between earnings and asset prices has widened steadily, eroding the purchasing power of salaried households.
Salary growth hides a deeper affordability problem
Shrivastava compared a monthly salary of ₹3,500 in 1990 with today’s median income of ₹27,000–₹29,400. While this appears to show strong growth, inflation-adjusted calculations tell a different story.
Adjusted for an average annual inflation of about 6 per cent, ₹3,500 in 1990 has roughly the same purchasing power as ₹27,000 today. In effect, salaries have largely kept pace with inflation—but not with the price of assets such as homes, land, gold and equities.
“While salaries are compounding very slowly in India, asset prices are growing much faster,” Shrivastava noted, calling this phenomenon asset price appreciation.
Property prices outpace incomes in major cities
The mismatch is especially visible in housing. Data from real estate platforms and consulting firms shows that house prices in metros such as Mumbai, Delhi and parts of Bengaluru grew at 10–11 per cent annually between 2000 and 2020. At the national level, average house-price growth has been closer to 6 per cent, though regional variations are wide.
In contrast, India’s nominal per-capita GDP rose from about $1,450 in 2013 to $2,256 in 2023—roughly 4–5 per cent annual growth in dollar terms. Even accounting for higher rupee-based growth, incomes have lagged behind double-digit property inflation in many Tier-1 cities.
Easy debt fuels asset inflation
Shrivastava traced part of the problem to changes after the 2008 global financial crisis, when borrowing became easier and consumer credit expanded rapidly. Many fintech firms, he pointed out, now focus heavily on lending.
“When people take more debt and trade an asset more, prices amplify further,” he said, explaining how borrowed money entering property markets pushes prices higher and worsens affordability.
A reshaped middle-class reality
The result is a growing divide: those who already own assets see their wealth rise, while aspiring homeowners struggle to catch up. Though trends vary across regions, in most urban centres the gap between incomes and home prices continues to widen, reshaping what financial security and upward mobility mean for India’s middle class.