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Ahmedabad most affordable housing market, Mumbai most expensive: Knight Frank India

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All housing markets in the country have seen a decline in affordability due to the recent rise in home loan interest rates as a result of the 90 BPS rise in repo rates, according to Knight Frank India’s Affordability Index for H1 2022.

As per the mid-year assessment of the affordability index, Ahmedabad is the most affordable housing market amongst the top eight cities, with a ratio of 22%, followed by Pune and Chennai at 26% each in the first half of the calendar year 2022.

Knight Frank’s proprietary Affordability Index, which tracks the EMI to income ratio for an average household, witnessed steady improvement from 2010 to 2021 across the eight leading cities of India especially during the pandemic when the RBI cut the repo rates to decadal lows. However, with two consecutive repo rate hikes, the cumulative 90 bps rate hikes by the RBI has decreased home purchase affordability on an average by 2% across markets and increased the EMI load by 6.97%.

Commenting on the same, Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “The home affordability, due to the rise in home loan rates by 90 bps, has worsened in the last couple of months. On an average affordability has decreased by 200 – 300 basis points across the major markets. However, despite the hike in the rates, markets remain largely affordable. This, coupled with the positive change in sentiments towards home ownership, we expect demand to remain unhindered with the momentum backed by the latent demand in the market continuing. Further, factors like strong economic growth outlook, financial stability and job security, the purchasing capabilities of potential buyers are expected to remain intact.”

Mumbai

The city remains the most expensive residential market in the country. From 93% in 2010, the home purchase affordability index improved to 66% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 61% in 2020 and again to 53% in 2021. In H1 2022, the affordability index of the city currently stands at 56%.

Hyderabad

Hyderabad is the second most expensive residential market in the country. From 47% in 2010, the home purchase affordability index improved to 33% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 31% in 2020 and again to 29% in 2021. In H1 2022, the affordability index of the city currently stands at 31%.

NCR

NCR ranks third in terms of most expensive residential market in the country during H1 2022. The city’s affordability index has been fluctuating year on year. From 53% in 2010, the home purchase affordability index improved to 34% in 2019. With the advent of the pandemic in early 2020, the affordability index rolled back to 38% in 2020 but improved to 28% in 2021. In H1 2022, the affordability index of the city currently stands at 30%.

Bengaluru

Bengaluru follows NCR in terms of expensive residential markets in the country, ranking 4th expensive city in India. From 48% in 2010, the home purchase affordability index improved to 32% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 28% in 2020 and again to 26% in 2021. In H1 2022, the affordability index of the city currently stands at 28%.

Kolkata

Kolkata ranks third most affordable residential market in the country. From 45% in 2010, the home purchase affordability index improved to 31% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 30% in 2020 and again to 25% in 2021. In H1 2022, the affordability index of the city currently stands at 27%.

Pune and Chennai

According to the affordability index, Pune and Chennai are the second most affordable residential markets in the country.

Pune: From 39% in 2010, the home purchase affordability index improved to 28% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 26% in 2020 and again to 24% in 2021. In H1 2022, the affordability index of the city currently stands at 26%.

Chennai: From 51% in 2010, the home purchase affordability index improved to 29% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 26% in 2020 and again to 25% in 2021. In H1 2022, the affordability index of the city currently stands at 26%.

Ahmedabad

Ahmedabad has consistently been the most affordable city in India since 2019. From 46% in 2010, the home purchase affordability index improved to 25% in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 24% in 2020 and again to 20% in 2021. In H1 2022, the affordability index of the city currently stands at 22%.

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