Ahmedabad, Kolkata & Pune most affordable housing markets in 2022: Report

Despite showing the maximum improvement since 2011, Mumbai was the least affordable city in India in 2022: Knight Frank

With an affordability ratio of 22 per cent, Ahmedabad was the most-affordable Indian housing market in 2022, a report released on Monday said. It was followed by Kolkata and Pune with an affordability ratio of 25 per cent each.

The affordability ratio is defined as the ratio of Equated Monthly Installment (EMI) to the total income of an average household. The lower the ratio, the more affordable a house is.  

According to Knight Frank Research's "Affordability Index 2022", despite showing the maximum improvement since 2011, Mumbai was the least affordable city with a ratio of 53 per cent. In 2011, its affordability ratio was 100 per cent.

An affordability ratio of above 50 per cent is considered unaffordable. In 2022, Mumbai was the only city with a ratio of over 50 per cent.

The affordability ratio of Chennai and Bengaluru was 27 per cent each. In Delhi-NCR, it was 29 per cent and 30 per cent in Hyderabad.

The report also highlighted that due to repeated rate hikes, the overall affordability of buying homes in India declined in 2022 as compared to 2021 but was still higher than the pre-pandemic levels in 2019.

In 2022, the Reserve Bank of India (RBI) hiked the repo rate by 225 basis points (BPS). In response to the repo rate hikes, banks raise the interest percentage on deposits as well as loans.

"The severity of the impact of rise in home loan rates and in prices on the affordability index has been cushioned by a rise in incomes and growth in GDP, helping the residential market maintain its momentum," said Shishir Baijal, chairman and managing director at Knight Frank India.

"This augurs well for the industry as it had been hoping for a turn around for a while. For the new year, we hope this sales momentum will continue as we expect factors like GDP growth and inflation to remain stable," he added.