According to Knight Frank, Ahmedabad is the cheapest housing market among the eight major cities, while Mumbai is prohibitive due to the high EMI-to-total income ratio.
Indian markets have been best in decades for housing affordability, according to Knight Frank’s 2021 Affordability Index report released Wednesday.
The drop in house prices and decades of low home loan interest rates have helped improve housing affordability in 2021, she added.
The affordability index shows the percentage of income a household needs to finance the equivalent monthly rate (EMI) of a housing unit in a given city. So the index value of 40 percent for a city means that households in that city have to spend an average of 40 percent of their income to finance the PMI of the home loan for that unit.
A ratio of EMI to total income of over 50 percent is considered prohibitive.
Knight Frank said the affordability rate in Delhi-NCR has improved from a maximum of 38 percent in 2020 to 28 percent in 2021, “it said.
Ahmedabad became the cheapest housing market in the country with an affordability rate of 20 percent, followed by Pune with 24 percent in 2021. Mumbai’s affordability rate was 53 percent. However, the city’s affordability has improved the most since 2011.
Hyderabad’s Affordability Index was 29 percent and Bengaluru was 26 percent. Both Chennai and Kolkata scored 25 percent. The index tracks key factors such as house prices, home loan interest rates, and average household income to determine the buyer’s ability to buy a home.
Banks write home loans when the EMI to income is below 50 percent.
Check out the latest videos from DH: