Why Indians are investing more in property than ever before: Report

A new report by multi-family office Client Associates has found that Indian households are increasingly shifting their savings towards physical assets, with real estate now accounting for nearly 70 per cent of total household savings.

This marks a significant rise from the pre-pandemic average of 58 per cent recorded between FY16 and FY20.

Household debt also on the rise

The report highlights that household financial debt has increased to 6.2 per cent of GDP in FY24, compared to around 4.1 per cent in the pre-pandemic period. As a result, net financial savings have declined from 7.7 per cent to 5.2 per cent of GDP, indicating a shift in how Indian households manage income, borrowing and investment.

Real estate surge driven by affordability and aspiration

Investment in real estate has climbed to 12.8 per cent of GDP in FY24, making it the single largest savings category. According to the report, lower mortgage rates, rising incomes and strong aspirations for home ownership have contributed to this increase, particularly in urban and semi-urban areas.

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Shift in savings behaviour after pandemic

India continues to remain one of the world’s highest saving nations, with gross national savings exceeding 29 per cent of GDP. However, the composition of these savings has changed significantly since the pandemic, with households moving away from purely financial savings towards physical and market-linked assets.

Borrowing and credit expansion accelerate

Retail and personal lending has grown rapidly, expanding at a compound annual growth rate of 17.6 per cent between FY16 and FY25, nearly double the pace of nominal GDP growth. Credit card usage recorded the fastest growth at 25.2 per cent CAGR, followed by other personal loans at 20.1 per cent.

The report notes that Indian households are no longer passive savers but active financial participants, increasingly using credit to acquire assets and participate in financial markets.

Rising participation in markets

Investment flows into equities and mutual funds have also increased significantly, rising from about 4 per cent of financial asset flows in FY20 to nearly 15 per cent in FY25. This reflects growing participation in capital markets, especially among younger investors.

Opportunities and risks

While the report views rising borrowing as a sign of confidence and financial inclusion, it also warns that higher debt levels could strain household cash flows if not managed carefully.

India’s young population, expanding digital financial infrastructure and easier access to formal credit are expected to further accelerate these shifts in the coming years, reshaping how households save, borrow and invest.
(With IANS inputs)