Sky-high property prices in India: Zerodha's Nikhil Kamath questions if a crash is coming

As real estate remains India’s top investment choice, the question lingers: could the sector ever face a serious collapse? This debate came alive in a recent podcast featuring Zerodha co-founder Nikhil Kamath, who challenged industry veterans on the future of Indian property prices.

Irfan Razack, Chairman of Prestige Group, was unwavering in his belief that real estate prices won’t fall. “Whatever happens, real estate is solid,” Razack asserted, highlighting India’s vast population, urbanization, and rising middle class as enduring demand drivers. He noted, “Urbanization is just getting started here. While prices may plateau, demand is only growing as jobs and aspirations rise.”

Nirupa Shankar, Executive Director at Brigade Group, agreed, pointing out that India’s urban population is set to increase from 35% to 40% by 2030. “That’s about 120 million people moving to cities,” Shankar emphasized. She cited a recent FICCI-ANAROCK survey, where 59% of respondents preferred real estate as an investment. Shankar argued that India’s development pace and favorable macroeconomics will continue fueling property demand.

Supporting this outlook, WeWork India CEO Karan Virwani pointed to India’s demographic advantage. “We’re talking about decades of demand here,” he said. “This isn’t a market that will shrink anytime soon.”

Kamath, however, raised a cautionary note, comparing India’s situation to Japan’s demographic challenges, where declining birth rates have stalled the housing market.

“Today’s birth rate is just over two children per couple, compared to four or five a few decades ago,” he pointed out. “At some point, fewer generations will need homes.” Kamath added that remote work could slow urban demand, hinting at a potential shift in the real estate market's trajectory.

Interestingly, Kamath himself recently purchased his first home after years of promoting renting. This move drew criticism, with some calling his stance hypocritical. Addressing this on his podcast, Kamath admitted one drawback of renting: the uncertainty of staying long-term in one place. “I had to move out of a home I would’ve liked to stay in longer,” he explained, suggesting that stability can sometimes outweigh flexibility.

Experts believe that the rent-vs-buy decision ultimately depends on financial stability and lifestyle. Real estate consultant Abhishek Lodha, Managing Director of Macrotech Developers, advised purchasing a home early for both wealth creation and family stability. "Renting may seem attractive short-term, but it doesn’t create wealth or security in the long run,” he argued.

Financial advisors caution buyers to have at least 30-40% of the home’s value ready as a down payment and to choose locations with strong infrastructure and connectivity. Chartered accountant Sathish K.V. pointed out that renting often works out cheaper in the short term, but Agarwal of Finsafe argued that a home provides unique, long-term value. “Market investments may be volatile, but housing tends to retain value through uncertain times,” she said.