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After years of double-digit growth, house price rises in major Indian cities are expected to slow to just under 8 percent next year as a cooling economy and rising interest rates deter new buyers, a Reuters poll showed.
The survey of 11 property market analysts conducted over the past three weeks was for house prices in Asia's third-largest economy to rise 7.8 percent next year, well below the current rate of consumer inflation of around 10 percent.
The findings of the latest India housing market poll are similar to recent Reuters polls conducted in the United States, Canada, Britain, China and Brazil, where home price rises are also expected to lose momentum but not fall.
Home sales in India slowed this year and unsold inventory with builders has increased as economic growth in the broader economy has decelerated quickly to half the 10 percent rate it was running at before 2008.
But the main problem, in a country where almost one-quarter of the population earns less than 50 cents a day, is the price.
"In some of the key markets in the country property prices are sky high," said Sachin Sandhir, managing director at RICS South Asia.
"Due to uncertainty about the economy, high interest rates and rising inflation, developers are holding on to their prices, making some locations unaffordable."
Indeed, a 2,000 sq.ft (185.8 sq.metre) apartment in the posh South Mumbai neighbourhood of Malabar Hill costs more than $2 million. That is not far from the average three-bedroom unit in Manhattan, New York City, which costs around $2.6 million.
Although the majority of homes in Indian cities are nowhere near that expensive, it shows how far real estate values in India's financial capital have risen. And dwindling incomes have put low-cost homes out of reach for many people.
Most of the urban price rises are expected to take place in the southern coastal city of Chennai, followed by New Delhi and its suburbs and Bangalore, while already high prices in Mumbai will likely stagnate.
Analysts gave property in Mumbai and Delhi, India's two biggest cities, an overall rating of 9 on a 10-point scale where 1 is extremely undervalued,