Mumbai Hits Best Affordability Levels in 15 Years, but Home EMIs Still Drain 48% of Income
Despite hitting the best affordability levels in 15 years, Mumbai remains the most expensive housing market in India, with residents spending nearly half their income on home loan EMIs. The report by Knight Frank highlights the challenges in the city's real estate sector.
MumbaiHousing MarketAffordabilityHome LoansEmisReal Estate NewsJun 25, 2025
In contrast, residents in the National Capital Region (NCR, which includes Delhi and its suburbs) and Bengaluru spend less than 30% of their income on EMIs. In Ahmedabad, the figure is even lower at just 18%. This makes Mumbai the most expensive housing market among India’s top eight cities, as per Knight Frank’s affordability index for the first half of 2025.
The improvement in affordability comes after the Reserve Bank of India (RBI) cut interest rates by 100 basis points this year. Lower interest rates make home loans more affordable and are expected to boost housing demand in India.
Knight Frank noted that affordability levels are now at their best since the pandemic and are significantly better than they were at the end of 2024, just before the first rate cut in February 2025. According to the report, “Affordability levels are now at their best since the pandemic and are significantly better than the levels seen at the end of 2024, just before the first rate cut announced in February 2025.”
However, there are still challenges. Incomes have barely grown due to the slowing economy, while property prices have continued to rise. As a result, home sales in key markets are beginning to slow down after a two-year boom. Real estate firm ANAROCK reported a 28% drop in home sales across India’s top seven cities from January to March 2025, compared to the same period last year.
Despite these challenges, the reduced interest rates offer a glimmer of hope for potential homebuyers in Mumbai and other major cities. The real estate market is closely watching for further economic indicators and policy changes that could influence the housing sector in the coming months.
Frequently Asked Questions
What is the current affordability level in Mumbai's housing market?
Mumbai's housing market has hit its best affordability levels in the past 15 years, with households now spending 48% of their income on monthly home loan payments, down from 50% last year.
How do Mumbai's home loan EMIs compare to other major Indian cities?
In Mumbai, households spend 48% of their income on home loan EMIs, while in the National Capital Region (NCR) and Bengaluru, the figure is less than 30%, and in Ahmedabad, it is only 18%.
What impact have the Reserve Bank of India's interest rate cuts had on the housing market?
The RBI's interest rate cuts have made home loans more affordable, which is expected to boost housing demand in India.
What are the challenges facing the Mumbai housing market?
Challenges include stagnant incomes due to a slowing economy and rising property prices, leading to a slowdown in home sales after a two-year boom.
What is the trend in home sales in major Indian cities?
Real estate firm ANAROCK reported a 28% drop in home sales across India’s top seven cities from January to March 2025, compared to the same period last year.
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