Kolkata's Real Estate Market Thrives as Interest Rates Drop, Boosting Home Affordability
Kolkata has emerged as one of the most affordable housing markets in India, with a significant reduction in interest rates on home loans making it easier for buyers to secure financing. This shift is particularly beneficial for first-time homebuyers and those looking to upgrade their living situations.
Real EstateHome AffordabilityInterest RatesKolkataHousing MarketReal EstateDec 24, 2025
This means that just over a fifth of the annual income of buyers in Kolkata is spent on EMIs. In comparison, the affordability index of Mumbai is 47%, Hyderabad's is 30%, Delhi NCR's is 28%, Bengaluru's is 27%, and Chennai's is 23%. The city's real estate market has seen a significant shift in home affordability following recent reductions in interest rates on home loans.
Kolkata, being a price-sensitive city, is particularly impacted by changes in interest rates. Even a small rise or fall can significantly influence the decisions and lives of aspiring homebuyers. The KFI report shows a consistent improvement in affordability across eight major Indian cities between 2010 and 2021. The affordability index for Kolkata has improved from 45% in 2010 to 22% now.
According to KFI data, the current scenario in Kolkata is the most affordable in the past seven years. The ratio of EMI to household income has reduced from 32% in 2019 to 30% in 2020, 25% in 2021, 24% in 2023, and 22% now. More recently, with economic growth remaining resilient and inflation easing, the Reserve Bank of India (RBI) has reduced the repo rate by 125 basis points since February, leading to further improvements in affordability across most housing markets.
This supportive rate environment has helped residential sales remain close to the post-pandemic peak recorded in 2024. The trend is expected to continue into 2026, driven by the Indian economy's sustained and stable growth momentum. The reduction in interest rates has effectively lowered the cost of borrowing, making it easier for potential homeowners to secure financing for their dream properties.
This change is a boon for first-time homebuyers and those looking to upgrade their living situations, as it reduces the overall financial burden associated with purchasing a home. Developers in Kolkata are witnessing a surge in interest from homebuyers eager to take advantage of the favorable lending conditions. They believe that this trend will particularly stimulate the affordable housing market, which is more sensitive to changes in interest levels than other segments.
The improved affordability is not just a result of lower interest rates but also a reflection of the city's growing economic stability and the resilience of its real estate market. As more people find it feasible to own homes, the overall housing market in Kolkata is expected to see sustained growth and development.
Frequently Asked Questions
What is the affordability index in Kolkata, and how does it compare to other major cities in India?
Kolkata's affordability index, which measures the proportion of household income spent on EMIs, is 22%. This is one of the lowest among major Indian cities, with only Ahmedabad (18%) and Pune (22%) being slightly more affordable.
How has the reduction in interest rates impacted home affordability in Kolkata?
The reduction in interest rates has significantly improved home affordability in Kolkata. The cost of borrowing has decreased, making it easier for potential homeowners to secure financing and reducing the overall financial burden associated with purchasing a home.
What is the current trend in residential sales in Kolkata?
Residential sales in Kolkata are currently close to the post-pandemic peak recorded in 2024. The supportive rate environment and improved affordability are expected to sustain this trend into 2026.
How has the Indian economy's growth influenced the real estate market in Kolkata?
The Indian economy's sustained and stable growth momentum has played a crucial role in improving the real estate market in Kolkata. This growth has contributed to economic stability and increased the feasibility of home ownership for many residents.
Which segment of the housing market is most affected by the changes in interest rates in Kolkata?
The affordable housing market in Kolkata is the most affected by changes in interest rates. This segment is particularly sensitive to interest rate fluctuations, and the recent reductions have stimulated interest from homebuyers looking for more affordable options.
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