Mumbai’s housing affordability is at a 15-year high, but homeownership still remains out of reach for most buyers

Mumbai’s real estate market remains the most expensive in India with prices touching up to ₹3 lakh per sq ft

Mumbai’s affordability may be at its best in 15 years, but homeownership remains out of reach for most buyers. Even high-income earners face steep challenges, according to a National Housing Bank (NHB) analysis, it would take the top 5% of urban households in the financial capital over 109 years of savings to purchase an average home in the city, highlighting the severe affordability crisis.

Mumbai real estate market update: Affordability may be at its best in 15 years, but homeownership remains out of reach for most buyers. (Picture for representational purposes only) (Mehul R Thakkar/HT)

A recent Knight Frank India report highlights that Mumbai has reached its best affordability level in 15 years. However, this has not translated into real accessibility. It noted that the average Mumbai household spends 48% of its income on monthly home loan repayments, a slight improvement from 50% last year, but still significantly higher than in other major Indian metros.

This is the first time in the index's history that Mumbai has fallen below the 50% mark, which is considered the outer point of affordability. Mumbai’s market, which has always been above the threshold, has now become more affordable due to reduced home loan rates, the Knight Frank India report said. However, despite this, experts say that affordability remains far off.

Definition of affordable housing in India

As per government standards set in 2017, a residential unit with a carpet area of 60 square metres in metros and 90 square metres in non-metros and a value below ₹45 lakh falls under the category of 'affordable housing'.

However, real estate body CREDAI has been demanding that the cap on affordable housing be increased from ₹45 lakh to ₹75- ₹80 lakh and suggested that 1% GST be charged on under-construction housing units priced in the range of ₹75 to ₹80 lakh.

"The supply of affordable housing has not decreased. Units of 60 sq meters and 90 sq meters are still constructed, but their prices have gone beyond the cap. CREDAI will run a campaign to redefine this cap. This will ease the burden on customers because they will pay only 1 per cent GST instead of 5 per cent if a unit falls under the affordable category," Shekhar Patel, CREDAI President, told reporters in April 2025.

What ₹45 lakh can get you in Mumbai?

Mumbai's real estate market is the most expensive in the country, and purchasing a home in the financial capital is a dream come true for many homebuyers, considering that apartments cost as much as ₹20,000 per sq ft to ₹3 lakh per sq ft.

According to real estate consultants, with a ₹50 lakh budget, a 1 BHK apartment can be purchased in Mira Road, Vasai, Virar, Thane, Kalyan, Dombivali, Panvel, which are considered to be in the Mumbai Metropolitan Region (MMR) but do not fall in the city limits of Mumbai.

“Homebuyers can still find compact 2BHK options in areas like Titwala, Ambernath, Karjat, and Neral. However, within Mumbai city limits, ₹50 lakh would barely fetch a 1RK (Room-Kitchen) studio apartment in the suburbs, and even those are increasingly hard to come by,” said Piyush Doshi, a real estate consultant based in Mumbai’s western suburbs.

In the Mumbai real estate market, nearly 80% of the properties registered annually are in the up to ₹2 crore price range, according to the property registration data of the Maharashtra government collated by Knight Frank India, released in December 2024.

According to Mumbai's property registration data, the city registered 1.14 lakh properties in the first 11 months of the calendar year 2023. Out of these 1.14 lakh properties, over 94,000, or over 82%, were registered in the up to ₹2 crore price range, followed by over 12% in the ₹2 crore to ₹5 crore price range and over 4% in the above ₹5 crore price range.

In 2024, 1.28 lakh properties were registered, which is 12% more than in 2023. Out of the total 1.28 lakh property registrations, 1.01 lakh, or 78%, were in the up to ₹2 crore price range, followed by over 15% in ₹2 crore to ₹5 crore range and the balance over 5% in ₹5 crore and above range.

Should a family with a monthly income of ₹3 lakh take a ₹2 crore home loan?

According to experts, those with a monthly income of ₹3 lakh should purchase an apartment in the range of ₹1 crore to ₹1.25 crore if the purchase is heavily dependent on a home loan.

"If we consider ₹3 lakh as monthly family income, wherein husband and wife both earn ₹1.50 lakh each monthly. Assuming they purchase a ₹2 crore apartment on a 100% home loan, their monthly EMI will be around ₹1.75 lakh. This is more than 50% of the family's monthly income, and not advisable," said Viraj Modia, a chartered accountant based in Mumbai.

"The couple should rather take a home loan not more than ₹1.25 lakh, which will keep their monthly home loan EMI around ₹1 lakh, and keep a buffer for investments, savings, monthly expenses," Modi said.