Does Real Estate Beat Inflation?

According to data from the Ministry of Statistics and Programme Implementation, the real estate inflation rate in India for urban housing increased to 4.47% in December 2022 from 3.61% in the same month the previous year and 3.21% in December 2020. According to a Reuters poll of property experts, housing prices will rise steadily in the next few years, roughly in line with overall economic growth.

Does real estate beat inflation in India?

It is considered that investment in real estate can beat inflation in long term.

• Real estate debt is relieved by inflation:

As the housing market becomes inflationary, home prices gradually increase. The loan-to-value of any debt secured by the property decreases during this process, acting as a natural discount and institutionalised incentive to invest in real estate.  

An investor can put money into residential and commercial real estate developments to benefit from these advantages as well as a steady stream of income from the rent and leases collected. 

• Real estate offers the investor a lot of flexibility:

One can control the returns by increasing and controlling the rent charged to tenants, or by redeveloping one's property to increase its market value, including turning it into a commercial space, among other options. In addition to all of these benefits, owning real estate offers numerous tax advantages, and it has traditionally delivered higher returns than the majority of other alternative asset types.

• Invest in real estate to save yourself from housing shortages:

With India already having the largest population in the world and the world's population expected to reach 8.6 billion in 2030, purchasing real estate could also be a smart move to prepare yourself and your family for the impending housing shortage as well as to control inflation and the world's soaring cost of living.

• Beneficial for existing homeowners:

Because property values rise during inflationary periods, existing homeowners profit from this. Homeowners who want to sell can get a fair price for their properties due to a decreased supply. Due to their ability to raise rents and gain larger monthly revenues, real estate investors also benefit from better returns on their assets during inflationary periods. 

• Invest in high-value commercial-class property:

In order to realise the full growth potential of the real estate markets in India and around the world, one can be assured of a recurring and stable income by investing in a high-value commercial-class property through fractional ownership. This gives investors both profits and flexibility.

I’d like to conclude my answer here about the real estate inflation rate in India, and how investing in real estate can beat inflation.

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