Dream home is hard to get: 109 yrs of savings needed to buy one in Mumbai

Skyrocketing prices mean even top earners in Indian cities will need decades to afford a standard home

The real estate market is booming but homes in India’s largest cities are becoming unaffordable, even for the wealthy, according to two major reports.

 

In Mumbai and Gurugram, the top 5 per cent in income class have to save money for decades to buy a standard home, according to the ‘Trend and Progress of Housing in India’ report by the National Housing Bank (NHB) and the Household Consumption Expenditure Survey Factsheet’ of the National Sample Survey Office (NSSO).

 

NHB’s Residential Property Price Index (RPPI) tracks the cost of a 110 square metre (1,184 square foot) house in various cities. NSSO’s Household Consumption Expenditure Survey (HCES) 2022-23 provides income data for urban households, including the richest 5 per cent. Assuming a 30.7 per cent savings rate, as reported in ‘India Gross Savings Rate’, a report by CEIC Data, Business Standard calculated how long it takes to afford a home.

 

Here’s what the data shows for key cities: 

City	House Price (in lakh)	Annual Savings (in lakh)	Years to Buy
Mumbai	354	10.7	109
Gurugram	226	11.7	64
Bhubaneswar	120	2.3	53
Patna	81	6	45
Kolkata	97	8.2	39
Ahmedabad	94	8.1	38
Chennai	113	10.2	37
Bengaluru	115	10.4	36
Delhi	135	12.7	35
Lucknow	79	7.9	33
Dehradun	70	9.4	30
Ranchi	68	7.7	29
Guwahati	73	8.3	27
Thiruvananthapuram	87	10.9	26
Bhopal	57	7.2	26
Vizag	67	8.7	26
Raipur	50	6.5	25
Hyderabad	89	12.5	23
Ludhiana	55	7.9	23
Jaipur	45	9.3	16
Chandigarh	78	17.4	15

 

Mumbai is the least affordable city, requiring 109 years of savings for a Rs 3.54 crore home, even for those earning Rs 10.7 lakh annually. Gurugram follows, with a Rs 2.26 crore home requiring 64 years at Rs 11.7 lakh savings per year. Chandigarh is relatively affordable: a home costing Rs 78 lakh will take 15 years to buy if one has Rs 17.4 lakh in annual savings.

 

Mumbai and Gurugram

 

Housing demand in Mumbai outstrips supply. A 110 square metre home, which will be a modest 2BHK apartment, costs Rs 3.54 crore. Even the top 5 per cent, those with an estimated monthly per capita expenditure of Rs 22,352 (according to NSSO data), will struggle. Gurugram, a corporate hub near Delhi, is growing rapidly and the same-sized home costs Rs 2.26 crore. These cities highlight a broader trend: job-rich urban centers are pricing out even high earners.

 

What does this mean for your finances?

 

For middle class families, owning a home in Mumbai or Gurugram is difficult. Young professionals starting their careers face an even steeper climb. Planning to buy a home reshapes personal finance in several ways:

 

Many may need to settle for smaller homes or live on rent for long.

 

Loan dependence: Taking a home loan means high interest rates and long tenures increase financial strain. The NHB notes that housing loans reached Rs 33.53 trillion by September 2024, up 14 per cent year-on-year.

 

More affordable cities like Chandigarh, Jaipur (16 years to repay a loan), or Hyderabad (23 years) may attract talent, but job opportunities often tie people to expensive hubs.

 

This situation also affects long-term goals. Saving for a home can crowd out other priorities like retirement or education, forcing families to rethink their budgets.

 

Broader implications

 

The affordability gap isn’t just a personal finance issue; it’s a societal one. High prices in cities like Mumbai and Gurugram could slow urban economic growth, as workers struggle to settle. The NHB report highlights regional disparities in housing finance: southern states (35 per cent) and western states (30 per cent) dominate loan distribution, while north-eastern states get just 0.68 per cent. This uneven access worsens the crisis in high-cost areas.

 

Government schemes like Pradhan Mantri Awas Yojana (PMAY) aim to boost affordable housing, but their impact in premium cities is limited. The NHB’s RESIDEX index shows a 6.8 per cent price rise in Q3 2024, suggesting costs will keep climbing without major policy shifts.

 

Looking ahead

 

For individuals, navigating this crisis requires smart planning. Start saving early, even if it’s a small amount. Explore suburbs or tier-2 cities where prices are lower. If loans are unavoidable, compare rates and opt for shorter tenures to minimize interest. Government subsidies under PMAY can help, especially for first-time buyers.