Developers expect improved home affordability to boost housing sales

Developers say lower home loan rates after RBI repo rate cuts have improved affordability across major cities, supporting buyer confidence and housing sales momentum into 2026

Real estate developers are expecting improved affordability to assist sales momentum across top Indian cities, aided by lower home loan interest rates following multiple repo rate cuts announced by the Reserve Bank of India (RBI).

 

How has affordability changed across major cities in 2025? 

According to Knight Frank India’s latest Affordability Index, the rate cuts have materially improved housing affordability across seven of India’s eight major cities in 2025. The index measures the proportion of household income spent on equated monthly instalments (Emis).

 

Residential sales in India dipped marginally by about 97 basis points year-on-year in the first nine months of 2025.

   

What are developers saying about buyer sentiment? 

Amit Jain, chairperson and managing director (CMD), Arkade Developers, said, “The sustained decline in interest rates for home loans has meaningfully improved housing affordability across key Indian markets, further reinforcing buyer confidence in 2025, particularly in traditionally stressed markets like Mumbai.” According to him, this has expanded the end-user base and supported sales momentum at near-peak levels.

 

Manan Shah, managing director, MICL Group, said he is already seeing measurable improvements in buyer sentiment and more confident decision-making, and expects this momentum to support healthy, sustainable demand going forward.

 

Which cities are the most affordable housing markets? 

Ahmedabad has emerged as the most affordable housing market among the top eight cities, with households spending 18 per cent of their income on Emis, compared to 20 per cent in 2024. Pune and Kolkata follow closely, both at 22 per cent. In 2024, the ratio for Pune was 23 per cent, while for Kolkata it was 24 per cent.

 

Lalit Parihar, managing director, Aaiji Group, a Dholera-based real estate firm, said, “Over the past fifteen years, Ahmedabad has steadily emerged as one of India’s most affordable yet fast-growing residential markets. The city’s strong economic momentum—driven largely by industrial expansion, including semiconductor manufacturing, and major infrastructure upgrades—has fuelled a sustained rise in household incomes. Combined with measured, consistent price appreciation, these factors have created a market where homeownership remains both desirable and attainable.”

 

Going ahead, Parihar expects Ahmedabad to maintain its leadership in affordability and livability.

 

How has Mumbai’s affordability profile changed? 

Mumbai, long considered one of the least affordable residential markets globally, has recorded a significant turnaround, with the Emi-to-income ratio declining to 47 per cent in 2025 from 50 per cent in 2024, the first time it has fallen below the widely tracked 50 per cent affordability stress threshold.

 

Rohan Khatau, director, CCI Projects, noted that easing rates have also encouraged buyers to upgrade. “The constant dip in interest rates on home loans has significantly eased affordability in the housing sector in 2025,” he said, adding that improved affordability in luxury segments is gradually lifting sales.

 

What impact are lower rates having on buyers and product mix? 

From a buyer’s cash-flow perspective, Sujay Kalele, founder and chief executive officer, Tru Realty, a firm with projects across Mumbai and Pune, said lower borrowing costs are being felt directly. “On a 20-year Rs 3 crore home loan, a 50-basis point drop can reduce the Emi by about Rs 9,000 a month, improving eligibility for salaried buyers without stretching budgets. From a developer’s lens, affordability is also changing the product mix.” He added that Mumbai’s affordability story is also linked to supply discipline and growing traction in premium housing.

 

Why did NCR see a dip in affordability? 

In contrast, the National Capital Region (NCR) was the only major market to see a marginal deterioration in affordability, from 27 per cent in 2024 to 28 per cent in 2025, driven by a premium-led increase in weighted average prices.

 

Vikas Bhasin, managing director, Saya Group, said demand remains steady, driven by both first-time buyers and upgraders. He pointed out that several micro-markets in Noida, Greater Noida and along NH-24 still offer quality housing at relatively attractive price points, supported by infrastructure and job growth.

 

How are other cities responding to affordability gains? 

Anjana Sastri, director – marketing, Sterling Developers, said improved affordability has helped sustain high residential sales and strong end-user confidence in Bengaluru. “Importantly, this relative affordability has also contributed to growing momentum in the luxury housing segment, as buyers can access larger, better-designed homes at more attractive price points compared to other major metros.” She added that effective rate transmission is likely to encourage long-term homeownership and sustain residential demand in the city.

 

What is the outlook for affordability and sales going ahead? 

With inflation easing, the RBI has cut the repo rate by 125 basis points since February 2025, leading to lower home loan rates. This has helped residential sales remain close to the post-pandemic peak of 2024. Knight Frank expects the supportive rate environment to extend into 2026 amid stable macroeconomic conditions.

 

Shishir Baijal, international partner and CMD, Knight Frank India, said, “Supportive affordability is essential for sustaining homebuyer demand and sales momentum, which in turn acts as a key economic driver for the country. Over the past few years, both weighted average prices and income levels have risen, even as home loan interest rates have followed the repo rate trajectory, which has declined 125 basis points this year.”

 

He added that rising incomes and easing borrowing costs have boosted end-user confidence for long-term commitments, and with the RBI’s GDP growth estimate of 7.3 per cent for FY26 and a benign rate outlook, affordability is expected to remain supportive of demand next year.