Mumbai Homes Become More Affordable as EMI Burden Dips Below 50%: Knight Frank Report
According to a recent report by Knight Frank India, the affordability of homes in Mumbai has seen a significant improvement, with the EMI-to-income ratio falling to 47%. This marks the first time the city has dipped below the 50% affordability threshold, making it more accessible for first-time homebuyers.
The Affordability Index, which measures the proportion of household income spent on EMIs, has shown steady improvement across eight major cities in India between 2010 and 2021. The decline in interest rates from the end of 2024 has played a crucial role in this positive trend.
Mumbai, known for its high property prices, has long been a challenging market for first-time homebuyers. However, the recent drop in interest rates has made it more feasible for individuals and families to purchase homes without overburdening their finances. This improvement is not just limited to Mumbai; other major cities in India have also seen a positive shift in home affordability.
The report highlights that the EMI-to-income ratio for Mumbai has consistently been above 50% in the past, making it one of the least affordable cities for homebuyers. However, the current ratio of 47% represents a significant improvement and is a welcome change for those looking to enter the property market.
Knight Frank India's Affordability Index takes into account various factors such as property prices, interest rates, and household incomes. The index provides a comprehensive view of the housing market and helps potential buyers make informed decisions. The decline in the EMI-to-income ratio indicates that the cost of homeownership is becoming more manageable, which could lead to increased demand in the housing market.
For first-time homebuyers, the improved affordability means that they can now consider purchasing properties in areas that were previously out of reach. This could also lead to a more balanced distribution of property purchases across different segments of the city, potentially easing the pressure on the most expensive areas.
The report also notes that while the overall trend is positive, there are still challenges that need to be addressed. For instance, the availability of affordable housing in certain areas remains a concern, and there is a need for continued efforts to ensure that the benefits of improved affordability are accessible to a wider segment of the population.
In conclusion, the drop in the EMI-to-income ratio below 50% in Mumbai is a significant milestone in the city's real estate landscape. It not only makes homeownership more achievable for many but also signals a positive trend in the broader housing market. As the trend continues, it is expected to have a ripple effect on the overall economy, contributing to growth and stability in the real estate sector.
