New Delhi, Dec 29 (Agency) Home buying affordability levels in Indian markets have declined in 2022 compared to 2021 due to 225 BPS cumulative increase in repo rate in 2022 and the consequent increase in home-loan rates, along with increase in residential prices caused, an annual proprietary study the Affordability Index 2022 by Knight Frank said. The study said Hyderabad is the second most expensive residential market after Mumbai, the study, released on Thursday said. However, while affordability levels in 2022 have worsened compared to 2021, they remain significantly better than the pre-pandemic levels in 2019.
From 53 per cent in 2011, the home purchase affordability index improved to 34 per cent in 2019. With the advent of the pandemic in early 2020, the affordability index further improved to 28 percent in 2021. With the advent of increase in repo rate in 2022 and the consequent increase in home-loan rates, along with increase in residential prices the affordability index of the city currently stands at 30 per cent, it said. All markets, except Mumbai, are recorded to be well below the threshold of comfortable affordability set at 50 per cent ratio while Ahmedabad emerged the most affordable housing market in the country with an affordability ratio of 22 per cent followed by Kolkata and Pune at 25 per cent each in 2022. Mumbai was the only one that recorded a higher than threshold affordability ratio at 53 per cent, it said.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “Despite the rise in REPO rate by 225 BPS in 2022 and the increase in home prices, home affordability has only marginally reduced by 100 to 200 BPS in major cities. The severity of the impact of rise in home loan rates and in prices on the affordability index has been cushioned by a rise in incomes and growth in GDP, helping the residential market maintain its momentum. This augurs well for the industry as it had been hoping for a turn around for a while”. For the new year, we hope this sales momentum will continue as we expect factors like GDP growth and inflation to remain stable, Shishir added.