HYDERABAD: Hyderabad is the second most expensive residential market in the country after Mumbai, according to Knight Frank India’s proprietary report, Affordability Index. The affordability index of the city has remained unchanged at 30 percent for three years (2022, 2023 and 2024).
Knight Frank India’s Affordability Index tracks the EMI (Equated Monthly Installment) to income ratio for an average household. This implies that on an average a household in Hyderabad needs to spend 30 percent of its income on payment of EMI for housing loan.
The affordability index evaluates the proportion of household income required to meet housing loan EMIs in major cities.
Ahmedabad is the most affordable housing market among the top eight cities, with an affordability ratio of 20 percent, followed by Pune (23 percent), Kolkata (24 percent), Bengaluru and NCR (27 percent), Chennai (25 percent).
Mumbai is the only city to exceed the affordability threshold, standing marginally higher at 50 percent, albeit affordability has improved.
In Hyderabad, the affordability ratio has stayed consistent at 30 percent since 2022. Mumbai has seen its affordability ratio improve from 67 per cent in 2019 to 50 per cent in 2024, yet it remains the only city where housing costs exceed the affordability threshold.
‘Home affordability remained steady’
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.
“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 percent GDP growth for FY 2025 and a stable interest rate environment, affordability levels are expected to continue supporting homebuyer demand in 2025.” Knight Frank India, Chairman and Managing Director, Shishir Baijal said.