Home affordability has dipped in NCR in 2024 with affordability ratio dipping to 27% in 2024 from 34% in 2019 and 38% in 2020. It, however, remained same in 2023, according to Knight Frank Affordability Index.
Knight Frank India’s Affordability Index tracks the EMI (Equated Monthly Instalment) to income ratio for an average household.
“Home affordability has remained favourable for homebuyers in 2024 as interest rates have stayed relatively steady since the end of 2023,” said the report, adding “Home affordability witnessed steady improvement from 2010 to 2021 across the eight leading cities of India, especially during the pandemic when the Reserve Bank of India (RBI) reduced the policy repo rate (REPO) to decadal lows. However, the RBI raised the REPO rate by 250 basis points (bps) over nine months starting May 2022 to tackle high inflation, thus affecting affordability across cities in 2022.”
According to the Index, Ahmedabad is the most affordable housing market among the top eight cities, with an affordability ratio of 20%, followed by Pune at 23% and Kolkata at 24%. Mumbai was the only city to exceed the affordability threshold, standing marginally higher at 50%, albeit affordability has improved.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “Affordability plays a crucial role in sustaining homebuyer demand and driving sales, which significantly contribute to the country’s economic growth. While property prices have seen a considerable rise, the steady increase in income levels has helped individuals maintain the financial confidence needed to invest in properties. As incomes grow and the economy strengthens, end-users are more inclined to make long-term financial commitments toward asset creation. With the RBI projecting a healthy 6.6% GDP growth for FY 2025 and a stable interest rate environment, affordability levels are expected to continue supporting homebuyer demand in 2025.”
All markets have shown improved or stable affordability, leading to sustained demand for homes. The enduring shift in homebuyers’ preferences and sentiments since the pandemic has kept demand resilient and the residential market buoyant.
