Mumbai's Housing Market Becomes More Affordable: Knight Frank Report
Mumbai, known for its high real estate costs, has seen a significant improvement in housing affordability due to lower home loan rates. Knight Frank's latest report reveals that the city's affordability index has dropped below the 50% threshold for the first time.
MumbaiReal EstateAffordabilityRbiHome LoansReal Estate MumbaiJun 24, 2025
The report, titled 'Affordability Index', tracks the EMI (Equated Monthly Instalment) to income ratio for an average household. An EMI/Income ratio over 50% is considered unaffordable, as banks rarely underwrite mortgages beyond this limit.
Ahmedabad stands out as the most affordable housing market among the top eight cities, with a ratio of 18%, followed by Pune at 22% and Kolkata at 23%. Mumbai, traditionally the least affordable city, has seen its affordability level drop from 50% in 2024 to 48% in H1 2025.
This is a historic moment for Mumbai, as the city's market has always been above the 50% threshold. The reduced home loan rates have played a crucial role in making the city more affordable for homebuyers.
In addition to Mumbai, the report highlights improved affordability in seven out of eight cities tracked by Knight Frank. Bengaluru and Hyderabad maintained their affordability levels at 27% and 30%, respectively. Chennai saw a slight improvement, with the affordability index moving from 25% last year to 24% in January-June 2025.
However, Delhi-NCR has become slightly less affordable, with the index rising to 28% in H1 2025 from 27% last year.
Angad Bedi, CMD of BCD Group, commented on the report, stating that the RBI's rate cut is a positive development for homebuyers. It will help reduce the EMI burden and accelerate sales of residential units. This, in turn, will encourage potential buyers to invest in the residential market before further price increases due to rising land and construction costs.
Bhavesh Kothari, Founder & CEO of Property First Realty, added that the three repo rate cuts in the first half of 2025 are expected to bring relief to new homebuyers. The cuts will help mitigate the significant price increases seen in the past year and reduce the EMI load, leading to higher savings.
Umesh Gowda H.A, Chairman and Founder of the Sanjeevini Group, noted that the EMI burden on homebuyers has decreased. As economic growth gains momentum amid falling inflation and rising incomes, home buying sentiments are expected to improve in the coming quarters.
Overall, the improvements in housing affordability across major Indian cities, particularly in Mumbai, are a positive sign for the real estate market. These changes are likely to boost home sales and investment in the residential sector.
Frequently Asked Questions
What is the Affordability Index?
The Affordability Index is a metric that tracks the EMI (Equated Monthly Instalment) to income ratio for an average household. It indicates the proportion of income required to fund the EMI of a housing unit in a particular city.
What is the threshold for housing affordability?
An EMI/Income ratio over 50% is considered unaffordable, as banks rarely underwrite mortgages beyond this limit. Below 50% is generally considered affordable.
How has Mumbai's housing affordability changed?
Mumbai's housing affordability index has improved from 50% in 2024 to 48% in H1 2025, making it more affordable for homebuyers due to lower home loan rates.
Which cities are the most and least affordable according to the report?
Ahmedabad is the most affordable city with an affordability level of 18%, while Mumbai is the least affordable with an affordability level of 48%.
What impact do the RBI's repo rate cuts have on homebuyers?
The RBI's repo rate cuts have reduced home loan rates, making it easier for homebuyers to afford EMIs and potentially increasing residential sales.
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