Mumbai's Housing Market Reaches 15-Year Low in Affordability

The numbers tell a story that would have seemed impossible just five years ago: buying a home in Mumbai now requires 47 percent of a household's income, down from 50 percent last year, and a crushing 93 percent in 2010, according to Knight Frank India Affordability Index report.

It is the first time the financial capital has dipped below the 50 percent affordability threshold, a milestone banks use to determine whether a mortgage is sustainable. Above that line, lenders rarely approve loans. Below it, homeownership shifts from fantasy to possibility for millions of middle-class families.

The transformation extends well beyond Mumbai. Seven of India's eight largest cities saw housing become more accessible in 2025, driven by the Reserve Bank of India's aggressive 125 basis point rate cut since February. Those reductions reversed the damage from 2022, when the central bank hiked rates by 250 basis points over nine months to combat runaway inflation.

Ahmedabad emerged as the nation's most affordable housing market at 18 percent, followed by Pune and Kolkata, both at 22 percent. Chennai clocked in at 23 percent, while Bengaluru and Hyderabad held steady at 27 percent and 30 percent respectively.

The outlier? The National Capital Region, where affordability actually deteriorated, ticking up from 27 percent to 28 percent, following a surge in premium-segment launches that pushed weighted average prices higher as wealthy buyers snapped up luxury properties.

“Still far below the 50 percent stress threshold,” the report noted, suggesting NCR's slight slip doesn't signal broader trouble.

Household incomes have been climbing faster than property prices, a rare reversal of the trend. This has made homeownership a more achievable goal for the middle class, particularly in cities like Ahmedabad and Kolkata, where the affordability index is significantly lower.

The Reserve Bank of India's rate cuts have played a crucial role in this shift. By reducing the cost of borrowing, the central bank has made it easier for potential buyers to secure mortgages, thereby boosting the housing market.

However, the NCR's slight decline in affordability highlights the complexity of the housing market. While the overall trend is positive, regional variations can impact specific segments of the market, such as the luxury property sector in the NCR.

Despite the challenges, the overall trend towards greater affordability is a positive sign for the Indian housing market. It suggests that policies and economic conditions are aligning to make homeownership more accessible to a broader segment of the population, which is a crucial factor in long-term economic stability and growth.