Home Affordability Trends: NCR Deteriorates, Mumbai Improves
New Delhi, Dec 23 (PTI) A sharp rise in housing prices across Delhi-NCR has affected affordability to purchase homes, despite a reduction in interest rates on home loans, according to Knight Frank.
In a statement on Tuesday, real estate consultant Knight Frank India mentioned that affordability has improved in Mumbai this year. The Knight Frank Affordability Index indicates the proportion of income that a household requires to fund the monthly instalment (EMI) of a housing unit in a particular city.
An index level of 40 per cent for a city implies that, on average, households in that city need to spend 40 per cent of their income to fund the EMI of a housing loan for that unit. An EMI/income ratio over 50 per cent is considered unaffordable.
According to the Index, Ahmedabad is the most affordable housing market among the top eight cities, with a ratio of 18 per cent, followed by Pune and Kolkata at 22 per cent.
In Mumbai, housing affordability has improved significantly, with the EMI-to-income ratio declining to 47 per cent in 2025. This improvement is a positive sign for the city's real estate market, indicating that more households can afford to purchase homes.
The affordability index in NCR, however, drops marginally to 28 per cent in 2025 from 27 per cent in the preceding year. "In contrast, the 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," the consultant said.
Despite the marginal drop, Knight Frank emphasized that the affordability levels in NCR remain well within acceptable limits. This suggests that while the NCR market has seen a slight deterioration, it is still relatively affordable compared to other major cities.
The report highlights the importance of monitoring housing affordability to ensure that real estate markets remain accessible to a broader range of potential buyers. For cities like Mumbai, the improvement in affordability could attract more first-time homebuyers, potentially boosting the overall market.
Knight Frank's Affordability Index is a crucial tool for policymakers, real estate developers, and homebuyers to understand the dynamics of the housing market and make informed decisions. As the real estate landscape continues to evolve, such insights will play a vital role in shaping future trends and policies.
