Ahmedabad Tops List of Most Affordable Housing Cities; Pune Second, Mumbai Remains Least Affordable

Pune:

Ahmedabad in Gujarat has emerged as the most affordable city in India for housing this year, according to a report by Knight Frank India. The city leads the ranking based on the ratio of monthly home loan instalments to household income. Pune follows closely in second place, while Mumbai remains at the bottom of the list due to its steep property prices.

Knight Frank India evaluated the affordability of housing across eight major cities—Mumbai, Pune, Delhi, Kolkata, Bengaluru, Hyderabad, Chennai, and Ahmedabad. The findings revealed that in Ahmedabad, the ratio of monthly home loan instalments to household income is 20 percent, making it the most affordable housing market in the country. Pune secured the second spot with a ratio of 23 percent, while Kolkata ranked third at 24 percent.

In stark contrast, Mumbai ranked last, with the ratio of home loan instalments to household income surging to a staggering 50 percent. The report noted that the lower this ratio, the more affordable the housing. Mumbai’s position reflects the challenging affordability of homes in the city, where soaring real estate prices continue to push buyers to their limits.

Chennai claimed the fourth spot in affordability, while Bengaluru and Delhi tied for fifth place. Hyderabad came in sixth. In these four cities, the ratio of monthly instalments to household income hovers around 30 percent.

How Housing Affordability is Measured

The affordability of housing is assessed by considering the average property prices in a city. Monthly instalments are calculated based on 80 percent of the home loan value, assuming a 20-year tenure. The percentage of a household’s income spent on these instalments determines the affordability. Ideally, monthly home loan instalments should not exceed 40 percent of household income. Banks typically avoid approving loans where this ratio exceeds 50 percent.

“Housing affordability is a key factor in sustaining demand for housing in the country and driving sales. Although house prices are rising, housing remains affordable as incomes are also increasing. This trend is expected to strengthen in the coming year,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.