Why Real Estate Is Still Expensive in India? (Even With Empty Buildings)

Why is Indian real estate expensive even when so much inventory is lying unsold?
Let’s decode the truth behind this real estate puzzle.

🧩 The Indian Real Estate Paradox

According to data from PropTiger and Knight Frank, India currently has over 9 lakh unsold housing units across top cities like Mumbai, Delhi NCR, Bengaluru, Pune, and Hyderabad.

Logic says:

More supply → lower prices.

But in India, the opposite happens.
Prices continue to climb — often 8–10% annually in prime areas.

Why? Because real estate here isn’t just an economic market — it’s an emotional one.

🏗️ 1. Developers Play the “Artificial Scarcity” Game

Builders rarely reduce prices, even with unsold inventory.
Why? Because price cuts hurt their brand perception and loan valuation.

Banks and investors measure project worth based on declared prices.
If developers cut rates publicly, it can trigger:

• Lower collateral value for bank loans
• Panic among existing buyers who paid more
• Bad press and market distrust

So instead of lowering prices, they simply slow down sales, delay launches, or hold inventory until the market “catches up.”

💰 2. Land Costs & Legal Bottlenecks

Land acquisition in India is expensive and tangled in paperwork.
Developers spend 30–40% of project cost just on land, and another 10–15% on approvals and legal fees.

Unlike western countries, land ownership laws here are complex — often involving multiple claimants or pending litigation.
This pushes up the base cost before a single brick is even laid.

🏦 3. Real Estate as a “Wealth Locker”

For India’s upper-middle class and NRIs, real estate is a store of wealth — not necessarily a home.
Buying property is seen as a long-term hedge against inflation and an asset for prestige.

So instead of selling at lower prices, many owners simply hold the property — even if it remains empty for years.
That’s why you’ll find thousands of dark apartments in Gurgaon, Noida, and Mumbai suburbs — owned but not occupied.

📊 4. Black Money & Speculative Buying

Real estate historically absorbed unaccounted money.
Though demonetization and RERA reduced this, the effect remains:

• Many early buyers bought multiple units only to resell at profit.
• Developers often book “ghost sales” to show demand and attract investors.

These speculative layers distort real demand — keeping prices artificially high.

🏠 5. Government Policies Focused on Growth, Not Affordability

Most government schemes (like PMAY) target first-time buyers but don’t push developers to make mid-segment homes cheaper.

At the same time, stamp duty, GST, and high interest rates increase the end price for genuine buyers.
So even if raw material costs fluctuate, the final buyer price rarely drops.

📉 6. Unsold ≠ Unwanted

A major chunk of unsold inventory is in luxury or high-priced segments — ₹1.5 crore and above.
Affordable homes (below ₹60 lakh) still sell out faster.

This mismatch between what’s being built and what people can actually afford fuels the illusion of oversupply.
In short:

The market isn’t oversupplied — it’s mis-supplied.

🧠 7. Psychology Plays a Role Too

Developers know Indians hate missing out on appreciation.
Even when prices rise, buyers think:

“Better buy now before it goes higher.”

This fear of missing out (FOMO) keeps demand alive — even in overpriced zones.

💬 Real Estate Expert’s Take

“Price correction in Indian real estate doesn’t happen visibly — it happens silently through stagnation,”
says Anuj Puri, Chairman, Anarock Group.
“Developers wait it out rather than mark down prices, and eventually inflation makes them look affordable again.”

❤️ Final Thought

The reason real estate is still expensive in India isn’t lack of homes — it’s how the system values them.
Between inflated land prices, brand perception, speculative investors, and policy gaps, housing has turned into a luxury commodity more than a necessity.

But awareness is growing — and with RERA, transparency, and digital property records, the future may finally shift toward a more balanced, buyer-friendly market.

Till then, India’s real estate puzzle remains unsolved —
Lakhs of homes are empty, yet prices keep rising.

⚠️ Disclaimer

This article is for educational and informational purposes only. All facts are based on publicly available data from Knight Frank, PropTiger, and government reports. Real estate prices and policies may vary across states and cities. Readers are advised to verify details before making investment decisions.