Ahmedabad is most affordable housing market & is among top eight cities in India: Knight Frank India

Hyderabad, July 1 (FN Agency) Ahmedabad is the most affordable housing market amongst the top eight cities in the country, with a ratio of 22 percent followed by Pune and Chennai at 26 percent each in the first half of the calendar year 2022, according to Knight Frank India in its proprietary study report affordability index for H1 2022. The study cited that all markets have seen a decline in affordability due to the recent rise in home loan rates as a result of the 90 BPS rise in REPO rates. Ahmedabad has consistently been the most affordable city in India since 2019 and from 46 percent in 2010, the home purchase affordability index improved to 25 percent in 2019, the study revealed.With the advent of the pandemic in early 2020, the affordability index further improved to 24 percent in 2020 and again to 20 percent in 2021.

In H1 2022, the affordability index of the city currently stands at 22 percent by Ahmedabad while Pune and Chennai are the second most affordable residential markets in the country, it said. Knight Frank’s proprietary Affordability Index, which tracks the EMI (Equated Monthly Installment) 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 Reserve Bank of India (RBI) cut REPO rates to decadal lows. However, with two consecutive REPO rate hikes, the cumulative 90 bps rate hikes by RBI has decreased home purchase affordability on an average by 2% across markets and increased EMI load by 6.97 per cent.

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 city remains the most expensive residential market in the country followed by Hyderabad . NCR, Bengaluru, Kolkata, Pune and Chennai. In H1 2022, Mumbai stands 56 percent in the affordability index of the city followed by Hyderabad (31 per cent , NCR (30 per cent), Bengaluru (28 per cent), Kolkata (27per cent) , Pune (26 per cent) and Chennai (26 per cent), the study added.