The affordable housing crisis is increasingly affecting metro cities, while Tier 2 cities have seen significant financial improvements and enhanced quality of life among homeowners, according to a survey by Home First Finance.
The survey attributed these gains in smaller cities are due to lower living costs, greater access to local employment opportunities, and supplementary income from family-run businesses. Affordable housing options in Tier 2 cities have made it easier for families to manage EMIs without sacrificing their lifestyle, unlike in Tier 1 metros, where rising costs often lead to mounting financial stress.
In contrast, the study, based on responses from 280 households across India, found that high living costs and limited disposable income in metro cities often overshadow the benefits of homeownership.
Of the 31 families who reported increased financial pressure and responsibilities, 58% were from Tier 1 cities, highlighting the stark contrast in homeownership experiences across urban India.
"These buyers struggled with rising EMIs, high living expenses, and maintenance costs. For many, the pressure of mortgage repayments offset potential savings, resulting in tighter household budgets and limited disposable income," the report said.
“Yes, there is a lot of mental calmness that my family and I feel now, what else does one need in life?" one of the surveyors living in a Tier 2 city said. "I am able to spend money on leisure activities also.”
{{/usCountry}}“Yes, there is a lot of mental calmness that my family and I feel now, what else does one need in life?" one of the surveyors living in a Tier 2 city said. "I am able to spend money on leisure activities also.”
{{/usCountry}}At least 50% of Tier 2 city residents saw their household income rise after purchasing a home, while 56% also noted an increase in savings. The survey attributed these gains to lower cost of living, access to local employment, and supplementary income through small family businesses. The affordability of housing in smaller cities also made it easier for families to manage EMIs without compromising on lifestyle, the survey said.
Also Read: Housing affordability: Ahmedabad, Pune, and Kolkata lead as Mumbai sees improvement
Homebuying as a financial security for owners: Survey
As many as 51% of homeowners reported a sense of mental peace and stability after buying their homes. For many, the transition from renting to owning meant freedom from frequent relocations, landlord interference, and rental hikes. Households also said they could now invest more confidently in education, amenities, and long-term planning.
"This house is not just a home, it’s a symbol of everything I have worked for," one of the surveyors said. "My children now have a safe, comfortable place to grow up."
Homeownership also provided self-employed individuals with a sense of security; 63% of the surveyors reported greater overall stability, which enabled them to take business risks they might have otherwise avoided. "For instance, many used the stability of homeownership to take calculated risks, such as expanding their business operations from within their homes," the report said.
For many others, owning a home provided the confidence to reinvest in their businesses and explore new income streams, with 22% reporting a rise in earnings, it said.
Also Read: 109 years in Mumbai, 64 years in Gurugram: Can top earners still afford to own a home in major cities?
Housing out of reach for middle-class Indians, say Redditors
With property prices surging in India’s major metros, many middle-class families are finding it harder than ever to buy a home. Conversations on Reddit reflect a growing challenge, as household incomes fail to keep pace with escalating real estate costs, making homeownership an increasingly distant goal.
In cities like Delhi, Bengaluru, and Mumbai, prospective buyers say even modest 2BHK flats in decades-old buildings now command prices of around ₹1.7 crore. "These are not upscale, newly built homes, but ageing apartments with minimal amenities, outdated infrastructure, and limited parking," Redditors say.
Despite their condition, prices remain high due to strong demand, limited supply, and the overall pressure on urban housing markets. As one Reddit user put it, “It’s becoming impossible for middle-class families to buy a basic home, let alone aspire for something better.”