Ahmedabad tops affordability chart; MMR, NCR stay beyond 50% EMI threshold

Ahmedabad remains the most affordable housing market; MMR, NCR continue to breach affordability threshold

Homebuyers in most major Indian cities continue to enjoy manageable housing loan repayments despite rising property prices, with six of the country's eight largest residential markets remaining within the affordability threshold in the first half of 2026, according to Knight Frank India.

 

The property consultant's latest Affordability Index showed that lower borrowing costs following the Reserve Bank of India's cumulative 125 basis points (bps) rate cuts have largely offset the impact of rising home prices, keeping monthly equated monthly instalments (EMIs) within acceptable limits for buyers.

 

Knight Frank defines housing as affordable when a household spends 50% or less of its income on home loan EMIs. By this measure, only the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) remain unaffordable, with EMI-to-income ratios of 69% and 67%, respectively.

 

 

Among the eight cities tracked, Ahmedabad emerged as India's most affordable housing market, with an EMI-to-income ratio of 23%, followed by Kolkata (25%), Pune (28%), Chennai (29%), Bengaluru (35%) and Hyderabad (41%).

 

The report noted that affordability remained broadly stable across most cities compared to 2025. However, Bengaluru's affordability weakened marginally, with the EMI-to-income ratio rising from 34% to 35%, while NCR deteriorated slightly from 66% to 67%. Affordability levels in Mumbai, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad remained unchanged.

 

According to Knight Frank, affordability has improved significantly over the past decade, aided by lower interest rates and rising household incomes. The trend accelerated during the pandemic when the RBI cut the repo rate to record lows. Although affordability worsened after the central bank raised rates by 250 bps between May 2022 and early 2023 to tackle inflation, recent monetary easing has once again improved home loan affordability.

 

The RBI has cut the repo rate by a cumulative 125 bps before pausing at 5.25% in its February and June 2026 monetary policy meetings. Knight Frank said the accumulated benefit of these rate cuts continues to support residential demand even as property prices have increased.

 

"Housing affordability remains a key driver of residential demand. The cumulative benefit of lower interest rates continues to support homebuyers across most markets, helping sales remain close to post-pandemic highs," said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.

 

He added that while rising property prices have moderated affordability gains over the past year, healthy employment, stable incomes and supportive financing conditions continue to underpin housing demand.

 

The report expects affordability to remain broadly stable through the second half of 2026, supported by steady employment, urbanisation, income growth and a stable interest rate environment, although inflationary pressures and geopolitical uncertainties could weigh on sentiment.

 

EMI-to-income ratio (H1 2026)

• Ahmedabad: 23% (Most affordable)
• Kolkata: 25%
• Pune: 28%
• Chennai: 29%
• Bengaluru: 35%
• Hyderabad: 41%
• NCR: 67%
• MMR: 69% (Least affordable)

Affordability Index of Leading Eight Cities of India 

Source: Knight Frank Research. Note: For H1 2026, affordability levels are calculated keeping all variables constant, except for the interest rate and property price.

 

Note: The Knight Frank Affordability Index indicates the proportion of income that a household requires, to fund the

monthly instalment (EMI) of a housing unit in a particular city. An EMI/Income ratio over 50% is considered

unaffordable as it is the limit beyond which banks rarely underwrite a mortgage.

Note: The series reflects updated affordability index level, which accounts for revised methodology on residential

prices. 

Assumptions:

EMI, housing unit size and price/sq ft represent city-level averages.

EMI:

Loan Tenure – 20 years

Loan to Value – 80%

Home loan interest rate – Average home loan rates

Area of housing unit: House size is fixed for each city across the years but varies within different cities taking into

account the average size preference for each city.

Housing Price: Weighted average price based on unsold inventory for that city.