KOLKATA, Jan 1: Ahmedabad has been rated as India’s most affordable residential market in terms of home loans, followed by Kolkata and Pune in 2023, with Mumbai being the only city beyond the affordability threshold, according to a leading real estate consultancies.
Ahmedabad was the most affordable housing market in the country, with an affordability ratio of 21 percent. This implied that on average, a household in Ahmedabad needs to spend 21 percent of its household income to pay EMIs for housing loans, according to Knight Frank India’s proprietary affordability index Kolkata stood second on the affordability index with a ratio of 24 percent in 2023. The ratio level of the city has improved by 1 pc from 2022 and by 8 pc from the pre-pandemic year of 2019. In 2022, Ahmedabad was ranked 24th, followed by Pune and Kolkata.
According to the report, the EMI (equated monthly installment) to income ratio for households has improved in 2023 after a brief decline in affordability in 2022.
While marginally better than last year, home affordability across cities has also significantly improved since the pre-pandemic year of 2019.
The expected moderation in inflation and projected downward trend in interest rates should further improve home affordability in 2024, the report predicted.
Mumbai was the only city beyond the affordability threshold of 50 p.c., a level exceeding which banks rarely underwrite a mortgage.
The most expensive residential market in the country, Mumbai, has, however, seen an improvement of 2 percent in its affordability index, measured at 51 percent in 2023 from 53 pc in 2022.
Looking at the trend from the pre-pandemic period, the city has witnessed a significant improvement of 16 percent in its affordability levels from 67 pc in the year 2019.
Hyderabad is the second-most expensive residential market in the country. The affordability index of the city remained unchanged at 30 p.c. for both years of 2023 and 2022, as home prices increased by a prolific 11 per cent in 2023.
The National Capital Region (NCR) has seen its affordability index improve to 27 pc in 2023 from 29 pc in 2022.
Bengaluru is the fourth most expensive market, with an affordability index of 26 p.c. in 2023. The ratio of cities has improved marginally by 1 percent since 2022 and 6 percent from the pre-pandemic year of 2019, the report said.
The affordability index in Chennai has improved by 2 percent, from 27 percent in 2022 to 25 percent in 2023, the report said.
The city-wide average affordability statistics cannot highlight disparities in housing costs within sub-markets or across the income spectrum, according to Knight Frank Research.
“Anticipating stable GDP growth and moderation in inflation in FY 2024?25, affordability is expected to strengthen. Further, if the RBI decides to lower the repo rate later in 2024, as is widely expected, leading to a reduction in home loan interest rates, the affordability of homes in 2024 could see a noteworthy enhancement, providing a comprehensive boost to the sector.” Knight Frank India chairman Shishir Baijal said in a statement. (UNI)
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