Historically the price to annual rent ratio in the US was around 16-18 in most places, rarely going above 20 except in places like California. When I compare that to India, I see the ratios in excess of 30 in most places.
This is really high compared to US. In US the interest rates are around 4-8% vs 10% in India. The tenure of loan in US is about 30 years while in India its 20. In US the entire interest amount is tax deductible while in India its only upto 1,50,000. In us there are no tax deductions on rent while in India we do. In India, the rent control acts etc are so heavily in favor of the tenants that owners prefer keeping the house empty. This reduces the supply of rentable property. All of these factors point to a lower price-to-rent ratio. But its not.
In my view the properties in India are far overpriced than in US. Given the above one would expect the ratio to be 10. I do not see prices correcting that much. I think its not worth investing in a housing property unless you see remarkable growth in real estate value of the house. Housing as investment is really not worth it. One should buy a house only to live in it.
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