Ahmedabad, Pune, Kolkata most affordable housing markets in India
interest rates have stayed steady since the end of 2023, showed Knight Frank India’s Affordability Index.
Among key cities, Ahmedabad has emerged as the most affordable housing market with an Equated Monthly Instalment (EMI) to income ratio of 21% for an average household. Following closely are Pune and Kolkata, each with an EMI to income ratio of 24%. Mumbai was the only city that remained marginally higher than the threshold at 51%.
“Stable affordability is essential to sustaining homebuyer demand and sales momentum, which, in turn, acts as a key economic driver for the country. As income levels rise and economic growth strengthens, end-users’ financial confidence is significantly bolstered, encouraging them to make longer-term financial commitments toward asset creation,” said Shishir Baijal, CMD, Knight Frank India.
According to him, given the RBI’s healthy 7.2% GDP growth estimate for FY 2025 and a stable interest rate scenario, income and affordability levels are expected to continue to support homebuyer demand in 2024.
The Affordability Index witnessed steady improvement from 2010 to 2021 across the eight leading cities of India especially during the pandemic when the Reserve Bank of India (RBI) cut policy repo rate (REPO) to decadal lows.
The central bank subsequently raised the REPO rate by 250 bps in a space of nine months starting May 2022 to address growing inflation. This impacted affordability across cities in 2022.
As the REPO rate has remained steady since February 2023, healthy income growth
