Home affordability in India at best of the decade in 2021: Knight Frank

BENGALURU: India’s real estate markets are at their 10-year best in terms of housing affordability, where all cities except Mumbai were recorded as being well below the affordability threshold of 50%, said real estate advisor Knight Frank in his’Affordability Index 2021‘.

Ahmedabad became the most affordable housing market in the country, with an affordability rate of 20%, followed by Pune and Chennai at 24% and 25% respectively in 2021. Mumbai was the only city that recorded an affordability rate. accessibility above the threshold of 53%, but it has improved the most since 2011.

Knight Frank said the ‘Affordability index‘, which tracks the ratio of equivalent monthly payments (EMI) to the total income of an average household, has shown significant improvement in affordability since 2010. Despite the pandemic since early 2020, which has created disruptions in income households, housing affordability has only improved. Falling house prices and low mortgage interest rates over several decades have helped improve affordability in 2021.

The index captures changes in house prices, mortgage interest rates and average household income to determine the ability of buyers to buy a home in a given city. Since banks take out home loans when the IME-to-income ratio is below 50%, existing income and average note size measurements in seven of the eight markets make it easy for a buyer to finance their home purchase. .

“Over the past decade, the housing market has undergone a structural transformation on both the demand and supply side. This has made the environment for buying a home relatively attractive and safe. However, the main catalyst has remained affordability, which has seen a gradual improvement since 2015. For most of the last 5-6 years, residential prices have been corrected, leading to better affordability, however, the recent reduction in housing prices. mortgage interest rate less than 6.5%. has been a decisive factor in significantly improving housing affordability over the past 24 months. Without a doubt, it took a pandemic for the market to take a turn and strengthen homebuyer sentiment, which is now evident across the country, ”said Shishir Baijal, President and CEO of Knight Frank India.

“So now is the perfect time for potential buyers to buy a home given that all factors, in terms of regulatory environment, pricing and mortgage rates are right. We believe that a combination of improved levels of affordability and an economic recovery will serve as key catalysts for the country’s real estate market next year, ”Baijal added.

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