In 2024, home affordability improved across India’s major property markets, driven by a robust economy, income growth, and stable interest rates. According to a report by Knight Frank India, the affordability of homes—measured by the Equated Monthly Instalment (EMI) to income ratio—has improved in seven out of eight cities, with Ahmedabad, Pune, and Kolkata emerging as the most affordable housing markets.

Ahmedabad: India’s Most Affordable Housing Market

Leading the pack is Ahmedabad, where the affordability ratio stands at 20%, making it the most affordable city for homebuyers in India. The city’s housing market has been buoyed by policy incentives, infrastructure development, and industrial growth, making it a key destination for real estate investments. Pune follows with an affordability ratio of 22%, and Kolkata comes next at 24%, reflecting significant improvement in these cities.

Resilience in the Indian Residential Market

Despite rising property prices, the increase in income levels has enabled households to maintain their purchasing power. This resilience has been critical for sustaining housing demand and supporting real estate sales across the country. Mumbai, while remaining India’s most expensive housing market, has also seen a marked improvement in affordability, with a 17% enhancement in affordability since 2019.

Challenges in Bengaluru’s Housing Market

Bengaluru stands as an exception, where affordability has slightly declined. Homebuyers in the city now allocate 27% of their income toward EMI payments, highlighting a challenge in maintaining affordability in this otherwise thriving market. Despite this dip, housing demand in Bengaluru has grown by 23% annually since 2020, showcasing the strength of its residential market.

Sustained Demand with Stable Interest Rates

Stable interest rates and economic growth have played a pivotal role in maintaining home affordability across India. These factors have provided financial confidence to homebuyers, encouraging them to invest in residential properties. This trend is expected to continue into 2025, further supporting demand and fostering growth in the real estate sector.

The affordability improvement highlights the critical role of income growth and policy measures in making housing more accessible. With Ahmedabad leading the way and cities like Pune and Kolkata following closely, India’s real estate market continues to evolve into a more inclusive and dynamic sector.

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