Housing affordability worsened over past 4 years: RBI survey

A Reserve Bank survey Thursday showed that housing affordability has worsened in four years with Mumbai being the least affordable.

The RBI has been conducting a quarterly Residential Asset Price Monitoring Survey (RAPMS) since July 2010 on housing loans disbursed by select banks and housing finance companies (HFCs) across 13 cities.

"Housing affordability worsened over the past 4 years as the house price-to-income (HPTI) ratio increased from 56.1 in March 2015 to 61.5 in March 2019," the RBI said while releasing the survey.

Mumbai remains the least affordable city in India, while Bhubaneswar remains the most affordable city.

It further said the movement of median loan-to-income (LTI) ratio also confirms worsening housing affordability as it moved from 3 in March 2015 to 3.4 in March 2019.

The survey also said the median loan-to-value (LTV) ratio moved from 67.7 per cent to 69.6 per cent between March 2015 and March 2019 showing that banks have become increasingly risk tolerant.

LTV is a measure of credit risk on housing loans.

Another finding of the survey is that the median EMI-to-income (ETI) ratio, representing loan eligibility, has remained relatively steady during the past 2 years.

However, Mumbai, Pune and Ahmedabad recorded higher median ETI compared to other cities.

The study was conducted in Mumbai, Chennai, Delhi, Bengaluru, Hyderabad, Kolkata, Pune, Jaipur, Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar.