There is a bright light in the housing affordability space in India since the parameters, as per the data by Knight Frank India’s Affordability Index, have improved.
Though cities like Mumbai and Hyderabad continue to be out of reach of the common man by being expensive, it is the cities like Ahmedabad and Kolkata which stood out as more affordable options.
Speaking of the national capital, Delhi too has shown improvement in the affordability. The increased affordability, as per the Knight Frank India’s Affordability Index, can be attribute to the factors which include moderation in inflation and declining interest rates.
Notably, the International Property Consultant also suggests that this trend is expected to continue in 2024.
Ahmedabad’s EMI to Income Ratio at 21%, Pune and Kolkata Follow Suit
The Manchester of India, Ahmedabad is leading the pack with a EMI to income ratio of 21%.
Following in the list are the cities of Pune & Kolkata with the EMI to income ratio of 24% each. What is noteworthy is the improvement of affordability of Kolkata since 2019.
Affordability Trends: Mumbai Sees Improvement, Hyderabad Holds Steady, and Positive Shifts in NCR and Bengaluru
The maximum city, Mumbai tops the chart of being the most expensive residential market as the affordability ratio for the city remains beyond 50%. However, from 2022 to 2023, it has witnessed a 2% improvement in the affordability.
Next to Mumbai in the most expensive list is the city of pearls, Hyderabad. Not only is it the second most expensive real estate market but also it has unchanged affordability of 30% and an increase of 11% in home prices in 2023.
On the other side, though being on the expensive side itself, the National Capital Region (NCR) and Bengaluru have shown improvements when it comes to affordability from 2022 to 2023.
Further improvements in affordability can be seen particularly if the Reserve Bank of India (RBI) decreased the repo rate, which would translate the reduction in home loan interest rates, said Chairman & MD of Knight Frank India, Shishir Baijal.
The Knight Frank Affordability Index assesses the proportion of a household’s income required to fund the monthly EMI for a housing unit, considering an EMI/income ratio above 50% as unaffordable, as beyond this point, banks are hesitant to underwrite mortgages.
