Where to buy a budget house? Here are 5 most affordable cities in India in 2023
Housing affordability saw a steady improvement from 2010 to 2021 across the eight leading cities of India, even during the Covid-19 pandemic, when the Reserve Bank of India (RBI) cut repo rates to decadal lows, the data showed. However, things changed after the Russia-Ukraine war started last year which pushed global inflation due to supply chain disruptions.
To fight inflation, the RBI hiked repo rates by 250 basis points (bps) between May 2022 to February 2023, which resulted in a rise in interest rates of home loans as well. «This has impacted affordability by an average of 2.5 per cent across cities and increased the EMI load by 14.4 per cent since then.
However, demand has remained unimpaired and has sustained at the multi-year highs seen in H1 2023,» Knight Frank said.Mumbai least affordable among top cities: Knight Frank report The EMI to income ratio or affordability ratio is calculated as what part of average income level goes towards paying home loan EMIs. Lower the ratio more affordable the city is.
This ratio in all markets, except Mumbai, is way less than 50 per cent, which is considered to be the threshold for comfortable affordability, according to the Knight Frank India's Affordability Index. However, for Mumbai, the EMI to income ratio jumped to 55 per cent in H1, 2023 from 53 per cent in 2022.
In the NCR region, the EMI to income ratio was much lower though it increased to 30 per cent in H1, 2023 from 29 per cent in 2022. In Bengaluru, the affordability ratio rose to 28 per cent in H1, 2023 from 27 per cent, the data showed.
Affordability Index of leading eight cities of IndiaCityEMI to Income Ratio20102019202020212022H1. Read more on economictimes.indiatimes.com
