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Ahmedabad most affordable, Mumbai least for residential properties. See list
The index tracks if the Equated Monthly Instalment (EMI) to income ratio has increased or decreased for an average household and then delivers the results.
The increment in the interest rates of home loans has affected the affodability of residential housing properties in eight major cities of India. On Wednesday, real estate consultant Knight Frank India released its Affordability Index data showing the data for the first six months of 2023.
The index tracks if the Equated Monthly Instalment (EMI) to income ratio has increased or decreased for an average household and then delivers the results.
The Affordability Index tries to calculate the proportion of income that a household requires to fund the monthly EMI of a housing unit in a particular city. The values are derived assuming the home loan tenure to be 20 years, loan to value ratio of 80%, a fixed housing unit area and a median housing price in that city. So, a Knight Frank Affordability index level of 40% for a city implies that on an average, households in that city need to spend 40% of their income to fund the EMI of housing loan. An EMI/Income ratio over 50% is considered unaffordable as it is the limit beyond which banks rarely underwrite a mortgage, the Knight Frank India report said.
Here is the list of most affordable to least affordable major cities in India:
Ahmedabad — 23 per cent ratio
Pune — 26 per cent ratio
Kolkata — 26 per cent ratio
Bengaluru — 28 per cent ratio
Chennai — 28 per cent ratio
Delhi-NCR — 30 per cent ratio
Hyderabad — 31 per cent ratio
Mumbai — 55 per cent ratio
Knight Frank India Chairman on Affordability Index report
Shishir Baijal, chairman and managing director, Knight Frank India, said the demand in the residential segment has been at a multi-year high and office demand has been resilient despite the global scenario. “The mid and premium segments in the residential market have been consistently outperforming and points to a significant shift in the market’s underlying fabric. However, the 250 bps increase in policy rates has reduced affordability across markets by 2.5% on an average. And, while the market has remained strong thus far, further interest rate increases could put pressure on homebuyer ability and sentiments.”
