A Knight Frank India report indicates that affordability across the top eight cities remained stable in the first half of 2024. The stability is attributed to consistent interest rates, which have stayed steady since the end of 2023. The affordability index, which measures the equated monthly installment-to-income ratio, reflects this stability.
Among the eight cities, Ahmedabad emerged as the most affordable housing market, with a ratio of 21%. Pune and Kolkata followed closely, with a 24% ratio each.
Mumbai, on the other hand, remained the least affordable city, with a ratio of 51%. This highlights the significant disparity in affordability across different cities.
Knight Frank Affordability Index Of Top 8 Cities
The Knight Frank Affordability Index indicates the proportion of income that a household requires to fund the monthly installment (EMI) of a housing unit in a particular city.
Thus, a Knight Frank affordability index level of 40% for a city implies that, on average, households in that city need to spend 40% of their income to fund the EMI of a housing loan for that unit.
An EMI/income ratio over 50% is considered unaffordable, as it is the limit beyond which banks rarely underwrite a mortgage.
Overall affordability has improved across all markets since 2019, while prices have seen a rise across the top eight markets, ranging from 5% in Ahmedabad to 26% in Hyderabad.
Mumbai witnessed the sharpest improvement in affordability, with affordability recovering by 15 percentage points since 2019.
Kolkata market affordability improved from 32% in 2019 to 24% in H1 2024. Affordability levels in NCR and Bengaluru improved by 6 percentage points during the same period.
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