Many middle-class Indians today are finding it harder than ever to buy homes, not because they earn too little, but because asset prices have far outpaced salary growth over the past few decades. Akshat Shrivastava, a hedge fund manager and founder of financial education platform Wisdom Hatch, compares a Rs 3,500 monthly salary in 1990 to today's median salary of Rs 27,000-Rs 29,400. On the surface, that looks like growth. But adjusted for 6% annual inflation, Rs 3,500 in 1990 holds roughly the same purchasing power as Rs 27,000 today. That, Shrivastava argues, is the root of the issue: while salaries have generally kept pace with inflation, they haven't matched the pace of asset price growth, especially in real estate. "While the salaries are compounding very slowly in India, the asset prices: houses, land, gold, stocks have been growing at a much faster rate," he wrote. He calls this trend asset price appreciation, and notes that it's eroding the middle cla...
Many middle-class Indians today are finding it harder than ever to buy homes, not because they earn too little, but because asset prices have far outpaced salary growth over the past few decades.
Akshat Shrivastava, a hedge fund manager and founder of financial education platform Wisdom Hatch, compares a Rs 3,500 monthly salary in 1990 to today's median salary of Rs 27,000-Rs 29,400.
On the surface, that looks like growth. But adjusted for 6% annual inflation, Rs 3,500 in 1990 holds roughly the same purchasing power as Rs 27,000 today.
That, Shrivastava argues, is the root of the issue: while salaries have generally kept pace with inflation, they haven't matched the pace of asset price growth, especially in real estate. "While the salaries are compounding very slowly in India, the asset prices: houses, land, gold, stocks have been growing at a much faster rate," he wrote.
He calls this trend asset price appreciation, and notes that it's eroding the middle class's ability to achieve traditional financial goals, particularly homeownership.
The data backs this up. According to NoBroker and PwC, house prices in India's top metros: Mumbai, Delhi, and parts of Bengaluru have grown at 10-11% annually between 2000 and 2020. Nationally, average house-price growth has been closer to 6% per year, with significant regional variation.
Incomes haven't kept pace. India's nominal per-capita GDP rose from around USD 1,450 in 2013 to USD 2,256 in 2023-a growth rate of 4-5% annually in dollar terms. While rupee-based income growth is slightly higher, it still trails the double-digit property price inflation seen in many Tier-1 cities.
Shrivastava traces part of the issue to post-2008 changes in global finance. Debt became more accessible, and consumer borrowing surged. "Debt is encouraged," he noted, pointing out that many of India's leading fintech startups have moved into lending as a core business.
"When people take more debt and trade an asset more, the price amplifies further," he explained. As more buyers enter the market with borrowed funds, prices inflate even further, worsening affordability.
"People who get this are amplifying their wealth. People who don't, keep questioning why the prices of everything keeps going up," he added.
While the trend isn't uniform across India or over time, in most urban centres, especially metros, the gap between what people earn and what homes cost has grown steadily, reshaping what financial stability looks like for the middle class.
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