Ahmedabad continues to be most affordable housing market in India: Report

Pune and Kolkata rank next in Knight Frank India's index, which says Mumbai is 'unaffordable'

Ahmedabad is the most affordable major Indian city for housing — a position it has held since 2019 , said a report by real estate consultancy Knight Frank India on Wednesday.

The company's India's Affordability Index., which tracks the equated monthly instalment (EMI) to income ratio for an average household, showed that a person needs to pay 21 per cent of their income for repaying a home loan in Ahmedabad. The Gujarat city was followed by Pune and Kolkata at 24 per cent each.

A higher reading on the index for a city means it is less affordable for an average household to buy a house on loan. A ratio over 50 per cent is considered unaffordable, as it is the limit beyond which banks rarely underwrite a mortgage.

Mumbai, with a ratio of 51 per cent, was the only major city considered "unaffordable,".

The report highlighted that overall affordability of homes in India has improved vastly in the last decade and a half. In 2010, the index gave a reading of 93 per cent in Mumbai, followed by 53 per cent in the National Capital Region and 51 per cent in Chennai.

This year, the affordability in these cities has been 51 per cent, 28 per cent, and 25 per cent, respectively. This improvement is mainly due to a fall in the repo rate.

"As income levels rise and economic growth strengthens, end-users’ financial confidence is significantly bolstered, encouraging them to make longer-term financial commitments toward asset creation," said Shishir Baijal, chairman and managing director of Knight Frank India.

"Given the Reserve Bank of India's healthy 7.2 per cent gross domestic product growth estimate for FY25 and a stable interest rate scenario, income and affordability levels are expected to continue to support homebuyer demand in 2024," he said.