Mumbai: Mumbai is the most expensive real estate housing market in India, whereas Ahmedabad is the most affordable one, according to Knight Frank India- a leading property consultant who released an Affordability Index.
As per the report, Mumbai is the most expensive Indian city to live in, based on EMI to income ratio.
Methodology:
The report used the proportion of income that a household would need to be able to pay the EMI against its home loan, as the basis to calculate the affordability index.
The affordability index essentially is the measure of a person’s ability to afford an item compared to their income.
In simpler terms, if the affordability index of a city is 38%, that will imply that on average, households in that region need to spend 38% of their income to be able to pay the EMI of their housing loan.
According to the report, an EMI to income ratio exceeding 50% is considered unaffordable as it is the limit beyond which banks rarely underwrite a mortgage.
The index includes eight cities which are- Mumbai, Hyderabad, Bengaluru, Delhi-NCR, Kolkata, Chennai, Pune, and Ahmedabad. Out of these, Mumbai is the most expensive housing market with an EMI to income ratio of 55%.
Next is Hyderabad with an EMI-to-income ratio of 31%. Third on the list is Delhi NCR with an EMI-to-income ratio of 30%. Followed by Chennai and Bengaluru with a ratio of 28%. Whereas, Pune and Kolkata share a ratio of 26%. Last, it is Ahmedabad, the most affordable housing market with a ratio of 23%.
Indian cities like Mumbai, Delhi, Bengaluru, Pune, and Ahmedabad are also premium due to limited land supply, and their corporate and industrial set up and thus they get a lot of migrant population each year.
Knight Frank India cites, the increase in interest rates on home loans has significantly affected the affordability of residential properties across India.