Bengaluru’s ₹3-crore housing boom: Debt behind the gloss

Bengaluru’s ₹3-crore housing boom is debt-driven, with EMIs eating 60–70% of salaries as affordable housing shrinks and risks rise

Bengaluru’s real estate market is witnessing a surge in premium housing launches priced between ₹2–3 crore, with ‘Sold Out’ signs dominating billboards. While this suggests rising prosperity, financial experts caution that the boom is being fuelled more by debt than by accumulated wealth.

Debt-Driven Purchases

Many salaried professionals are stretching their finances to buy high-value homes, relying heavily on bank loans rather than savings. Home loans are often layered with car and personal loans, pushing monthly EMIs to consume 60–70% of take-home pay. Though manageable on paper, such commitments leave households vulnerable to job disruptions and financial stress.

Shrinking Affordable Housing

Property prices in Bengaluru rose 10–12% year-on-year in 2025, while new launches increasingly target the premium segment. Affordable housing has shrunk to single-digit proportions, leaving buyers anxious about missing out. This fear of future unaffordability is driving purchases, even when current affordability is questionable.

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The Cost of Leverage

At prevailing interest rates of 8.5–9%, a ₹2 crore loan translates to EMIs of ₹1.6–1.8 lakh per month. To sustain this, households require post-tax incomes of ₹3.2–3.6 lakh, leaving little room for discretionary spending. Beyond finances, borrowers face hidden costs such as stress, reduced flexibility, and heightened risk exposure.

Macro Risks

India’s household debt has crossed 40% of GDP in 2026, highlighting growing reliance on credit. Analysts warn that Bengaluru’s housing boom reflects a heating credit cycle rather than organic wealth creation. The imbalance between premium supply and shrinking affordable options could exacerbate financial vulnerabilities.

Outlook

The city’s housing frenzy underscores the tension between aspiration and affordability. While premium projects continue to attract buyers, the reliance on debt raises concerns about sustainability. For prospective homeowners, the challenge lies in balancing long-term financial stability against the fear of being priced out of Bengaluru’s rapidly evolving real estate market.

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