Ahmedabad was the most affordable housing market in India in 2022 with an affordability ratio of 22%, shows a new report by property brokerage company Knight Frank. With 25% affordability, Kolkata (25%) as well Pune stood at the second position in terms of housing affordability, shows the report titled Affordability Index 2022.
Despite increasing affordability, Mumbai (53%) continued to be the most expensive housing market in the country, the report added.
The repot defines affordability ratio for a city based on the ratio of EMI to the total income of an average household. An affordability ratio of above 50% is considered unaffordable. The lower the ratio, the more affordable a house is.
The report also points out that repeated rate hikes by the RBI and along with average increase in property values have made housing less affordable in 2022 when compared to 2021.
“Affordability levels had improved even during the pandemic impacted years of 2020 and 2021 as residential price growth was subdued and the government aggressively cut policy rates to increase liquidity in the highly stressed economic environment,” the report said.
“Despite the rise in repo rate by 225 basis points in 2022 and the increase in home prices, home affordability has only marginally reduced by 100 to 200 basis points in major cities,” said Shishir Baijal, CMD, Knight Frank India.
“The severity of the impact of rise in home loan rates and in prices on the affordability index has been cushioned by a rise in incomes and growth in GDP, helping the residential market maintain its momentum. This augurs well for the industry as it had been hoping for a turn around for a while. For the new year, we hope this sales momentum will continue as we expect factors like GDP growth and inflation to remain stable,” he added.
