There’s been a lot of talk about real estate prices going up in India, especially in South Delhi. People who didn’t invest are upset, and those who did are happy. But if we look at the last decade, the picture is a bit different.

From 2013 to 2019, the prices of properties in South Delhi actually went down by about 20-30%. If you think about inflation, which makes the value of money decrease over time, this drop is even more significant. Let’s keep it simple:

Imagine you had a property worth 1 crore in 2013. Over the next six years, with inflation around 8% per year, the actual value of that property would decrease even if the price stayed the same. By 2019, that property would be worth much less in real terms.

To give you an idea, if the price stayed at 1 crore but inflation was 8% per year, the real value of your property would be like having only around 63 lakhs in 2019. So, the property didn’t really keep its value.

Now, from 2020 to 2024, property prices in South Delhi went up by about 35-40%. But we still need to think about inflation during these years too.

If we consider the same property which was worth 63 lakhs in 2019, and then its price increased by 35% by 2024, it would be around 85 lakhs when adjusted for inflation.

However, this won’t be visible to you because you might think your property is now worth 1 crore 35 lakhs due to the price increase. But in real terms, considering the value of the money you invested in 2013, it is still just 85 lakhs.

In contrast, prices in tier 2 and tier 3 cities like Goa, Gurgaon, Noida, and Jewar have increased much more significantly. From 2013 to 2019, prices in these cities also went down by about 20-30%. But from 2020 to 2024, they increased by 3.5 times. This results in an average annual return of about 10-15% from 2013 to 2024.

Positive Outlook and Future Prospects:

There’s no need to panic because prices have not really gone up so much higher. In real value terms, we have still not reached the value we were at in 2013. However, in some tier 2 and tier 3 cities, prices have increased significantly, averaging an annual return of about 10-15% from 2013 to 2024.

India now has a lot of scope for development, and everything is getting developed. Our stock markets, our investments, everything is going up. As people get more wealthy, they are going to look for more real estate, investing in more capital assets, land, and property. Over a very long period of time, we are about to see big prosperity coming. This indicates that real estate will provide steady and reliable returns.

There still may be a lot of room for prices to go up and for healthy returns on investment in real estate. But don’t expect crazy times again unless there’s an unlikely event where the government lowers interest rates by a lot, like by 2-3-4%.

A healthy, steadily rising real estate market that beats inflation by a percent or two is good returns from now on. This kind of growth is sustainable and provides solid returns without the risks associated with rapid price spikes. So, keep investing wisely and enjoy the steady growth.