Knight Frank report suggests Ahmedabad is the most affordable housing market, Mumbai the least, how other cities fare?
A report by Knight Frank India suggests that affordability across the top eight cities remained stable in the first half of 2024. This stability is attributed to consistent interest rates, which have stayed steady since the end of 2023 and consequently, the EMIs have remained constant. The affordability index is calculated on the basis of equated monthly installment (EMI) to income ratio, reflecting this stability.
The Knight Frank Affordability Index uses the ratio between the EMI and the overall income of a household to calculate housing affordability.
It indicates the proportion of income that a household requires to fund the monthly installment (EMI) of a housing unit in a particular city. For example, an affordability ratio of 21% means the EMI burden for housing stands at 21% of the household income.
Among the eight cities, Ahmedabad emerged as the most affordable housing market, with a ratio of 21%. Pune and Kolkata followed closely, with a 24% ratio each. Bengaluru is also not so bad from real estate affordability perspective with an EMI to income ration of 26%.
EMIÂ To Income Ratio Of Top 8 Cities
An EMI/income ratio over 50% is considered unaffordable, as it is the limit beyond which banks rarely underwrite a mortgage.
Mumbai, on the other hand, remained the least affordable city, with a ratio of 51%. This highlights the significant disparity in affordability across different cities.
Overall affordability has improved across all markets since 2019, while prices have seen a rise across the top eight markets, ranging from 5% in Ahmedabad to 26% in Hyderabad. However, increasing incomes have offset the increase in real estate prices.
Mumbai witnessed the sharpest improvement in affordability, with affordability recovering by 15 percentage points since 2019.
Kolkata market affordability improved from 32% in 2019 to 24% in H1 2024. Affordability levels in NCR and Bengaluru improved by 6 percentage points during the same period.
