As the demand for spacious living remains high, even with the decline of pandemic-driven work-from-home trends, finding affordable real estate in India has become increasingly challenging. The 2023 Affordability Index by Knight Frank India sheds light on the cities where property remains within reach for most buyers, offering a glimpse into the most cost-effective markets.
Mumbai continues to dominate as the most expensive residential market in India, surpassing the 50 percent affordability threshold. This high index suggests that a substantial portion of income is required for home purchases, rendering mortgages a significant challenge for many. Hyderabad follows, maintaining a 30 percent affordability index despite an 11 percent rise in home prices this year. The city’s property market remains costly but shows resilience. The National Capital Region (NCR) has shown some improvement, with its affordability index rising to 27 percent in 2023 from 29 percent in 2022. The anticipated completion of the Dwarka Expressway has buoyed property sales in adjacent areas like Greater Noida and Noida, although Delhi and Faridabad have seen limited new residential projects, contributing minimally to overall sales. Bengaluru also saw a slight improvement, with its affordability index reaching 26 percent.
In contrast, Ahmedabad stands out as India’s most affordable major city for homebuyers, with a 21 percent affordability ratio. This figure indicates that a household spends 21 percent of its income on Equated Monthly Instalments (EMIs) on average. Ahmedabad’s affordability is attributed to strategic urban planning and expansion efforts, which have prevented severe congestion and ensured balanced development. Pune ranks second in affordability with a 24 percent ratio, highlighting its appealing real estate market. The city has experienced a notable increase in residential sales, driven by migrant workers and salaried employees despite high home loan rates. Pune’s market remains strong, with rising demand leading to increased property prices in the latter half of 2023.
Kolkata, with a similar 24 percent affordability ratio, has seen a surge in home buying, partly due to ongoing stamp duty rebates. Chennai, buoyed by its expanding manufacturing, hospitality, and logistics sectors, ranks fourth with an affordability ratio of 25 percent. The city’s real estate market is attracting first-time buyers, reflecting its growing appeal for affordable housing options. These cities offer promising opportunities for buyers seeking budget-friendly real estate options, highlighting a diverse landscape where affordability and quality can still align.
