Ahmedabad is the most affordable housing market amongst the top eight cities, with a ratio of 22 per cent followed by Pune and Chennai at 26 per cent each in the first half of the calendar year 2022, the property consultant said in a statement.
Knight Frank’s affordability index witnessed steady improvement from 2010 to 2021 across the eight leading cities 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 basis points rate hikes by RBI has decreased home purchase affordability on an average by 2 per cent across markets and increased EMI load by 6.97 per cent.
Knight Frank India Chairman and Managing Director Shishir Baijal said the home affordability has worsened in the last couple of months.
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“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,” he added.
The affordability coupled with the positive change in sentiments towards home ownership would help in keeping the housing demand intact, Baijal said.
As per the data, Mumbai remains the most expensive residential market in the country. In H1 2022, the affordability index of the city increased to 56 per cent from 53 per cent in 2021.
Hyderabad is the second most expensive residential market in the country. In H1 2022, the affordability index of the city rose to 31 per cent from 29 per cent in 2021.
The Delhi-NCR market ranks third in terms of the most expensive residential market. In H1 2022, the affordability index of the city rose to 30 per cent from 28 per cent.
The affordability index of Bengaluru rose to 28 per cent from 26 per cent, while in Kolkata, the index increased to 27 per cent from 25 per cent.
According to the affordability index, Pune and Chennai are the second most affordable residential markets in the country.
The affordability index in Pune rose to 26 per cent from 24 per cent, while in Chennai, the index inched up to 26 per cent in H1 2022 from 25 per cent in 2021.
“Ahmedabad has consistently been the most affordable city in India since 2019,” the consultant said, adding that the affordability index of the city increased to 22 per cent from 20 per cent.
“In the last few years, capital values have remained stable across India or witnessed slight increase. However, during the same period income level has increased significantly, which has resulted in improved affordability,” said Pankaj Pal, Group Executive Director, AIPL.
While there is a slight increase in interest rate on home loans in the last couple of months, it is still below the comfortable levels of 8 per cent per annum, he said, adding, “we don’t expect any impact on affordability”.
According to Trehan Group Managing Director Saransh Trehan, affordability has been impacted slightly due to a rise in mortgage rates. “However, housing prices as well as home loan rates are still attractive for both end users and investors,” he said.