Ahmedabad Tops India’s Most Affordable Housing List

Homebuyers across India have received encouraging news as the latest Knight Frank India Affordability Report reveals which cities offer the most affordable housing in the country. According to the report, Ahmedabad has emerged as India’s most affordable housing market during the first half of the year, followed by Kolkata and Pune.

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The report measures housing affordability based on the share of a household’s income required to pay monthly home loan EMIs. Cities where the EMI accounts for less than 30% of household income are considered highly affordable. Ahmedabad recorded the lowest affordability ratio at 23%, followed by Kolkata at 25% and Pune at 28%.

In contrast, Mumbai continues to be the least affordable housing market in India, with home loan EMIs consuming 69% of household income, followed by Delhi at 67%.

Knight Frank India states that a home is considered affordable when the monthly EMI does not exceed 50% of household income. Based on this benchmark, six of India’s eight major cities qualify as affordable housing markets.

The report also highlights that the Reserve Bank of India’s lower interest rates, currently at their lowest levels in nearly a decade, have helped reduce home loan EMIs. However, rapid appreciation in residential property prices in some cities has offset this benefit, making homes less affordable despite cheaper borrowing costs.

Over the past decade, housing affordability has improved significantly across most Indian cities. Mumbai’s affordability ratio has declined from 77% to 69%, while Pune improved from 57% to 28%. Chennai fell from 55% to 29%, Hyderabad from 47% to 41%, Kolkata from 47% to 25%, and Ahmedabad from 42% to 23%.

However, the report notes that affordability has worsened in Delhi and Bengaluru, where EMI-to-income ratios now stand at 67% and 35%, respectively.

How Is Housing Affordability Calculated?

Knight Frank calculates affordability using the average size and price of homes sold in each city. The assessment assumes:

• A 20-year home loan tenure
• 80% financing of the property’s value
• Average monthly EMI compared with average household income

If the EMI remains below 50% of household income, housing is considered affordable.

Rising Property Prices Impact Affordability

According to Shishir Baijal, Chairman and Managing Director of Knight Frank India, housing affordability remains one of the biggest drivers of home demand. While rising property prices have reduced affordability in several cities, lower interest rates, steady income growth, improving employment opportunities, and easier access to finance continue to support home-buying decisions.

Housing Affordability Rankings (EMI as % of Household Income)

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