Affordable Housing Market: Ahmedabad Leads as Most Affordable, Mumbai Trails as Least
The affordable housing market in India has shown remarkable stability in the first half of 2024, according to a recent report by Knight Frank India. The report highlights that despite fluctuations in real estate prices, affordability across the top eight cities has remained consistent, largely due to stable interest rates since the end of 2023.
Key Findings on the Affordable Housing Market
The Knight Frank Affordability Index, which uses the equated monthly installment (EMI) to income ratio to determine housing affordability, reveals significant differences in affordability across various cities. This ratio indicates the proportion of household income required to pay the EMI for a home in a particular city.
- Ahmedabad: The city emerged as the most affordable housing market, with an affordability ratio of 21%. This means that households in Ahmedabad need to allocate 21% of their income towards housing EMIs.
- Pune and Kolkata: Both cities closely followed Ahmedabad, with an EMI-to-income ratio of 24%. This makes them attractive markets for affordable housing seekers.
- Bengaluru: With a ratio of 26%, Bengaluru also ranks high in terms of real estate affordability.
Conversely, Mumbai has been identified as the least affordable housing market among the top eight cities, with a steep EMI-to-income ratio of 51%. This stark difference highlights the disparity in housing affordability across India’s major urban centers.
Improvements in the Affordable Housing Market Since 2019
Despite the challenges, overall affordability has improved in all markets since 2019. This improvement has been driven by rising incomes, which have helped offset the increases in real estate prices. Notably:
- Mumbai saw the sharpest improvement in affordability, with the ratio improving by 15 percentage points since 2019.
- Kolkata improved its market affordability from 32% in 2019 to 24% in H1 2024.
- NCR and Bengaluru also saw a positive shift, with affordability levels improving by 6 percentage points over the same period.
The affordable housing market continues to evolve, with different cities presenting varying opportunities for potential homeowners. While Mumbai remains a challenge, cities like Ahmedabad, Pune, and Kolkata offer more accessible options for those looking to enter the housing market.
