New Delhi: House purchase affordability improved significantly across major Indian cities in 2025 with Ahmedabad as the most affordable among the top eight cities, a report said on Tuesday.
The report from property consultancy Knight Frank India showed Ahmedabad leading the Affordability Index with an EMI to income ratio of 18 per cent, followed by Pune and Kolkata at 22 per cent.
In Mumbai, the EMI to income ratio declined to 47 per cent, marking the first time the city’s affordability has fallen below the 50 per cent threshold, signalling sustainable level of housing affordability.
The consultancy attributed the improvement to a 125 basis point cut in the policy repo rate since February 2025 improving affordability, resilient economic growth, easing inflation and rising incomes.
A stable business and income growth environment coupled with reasonable price growth and increasingly enabling financing environment were the major causal factors behind improved affordability in Mumbai.
The National Capital Region (NCR) was the only major market to register a deterioration in affordability during the year, driven by a sharp rise in weighted average prices due to heightened activity at the premium end of the market.
Affordability had strengthened across India during the pandemic as the Reserve Bank of India (RBI) lowered the policy repo rate to decade lows, the report noted.
The supportive rate environment has helped residential sales sustain close to the post-pandemic peak recorded in 2024. The supportive interest rate environment is likely to continue into 2026, underpinned by the Indian economy’s sustained and stable growth momentum, it forecasted.
“Supportive affordability is essential for sustaining homebuyer demand and sales momentum, which in turn acts as a key economic driver for the country,” said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.
Over the past few years, both weighted average prices and income levels have risen at a faster pace, and in tandem with the reducing interest rates, has strengthened overall home affordability, he added.
(IANS)
