As per Knight Frank India’s ‘Affordability Index 2020’, Ahmedabad led India’s affordable housing market with an affordability ratio of around 24 per cent. Following that are Pune and Chennai with an affordability ratio of over 26 per cent each. This can be attributed to the decline in house prices as well as the home loans that are being offered at low interests rates. Furthermore, increase in income level is also one of the major reasons behind the improvement of affordability ratio.
Shishir Baijal, CMD, Knight Frank India, opined that the government intervention in improving credit flow and cutting down the stamp duty rate in some markets has also given a significant boost to the market thus, fostering confidence among homebuyers in 2020. “We believe a combination of best in decade affordability level and pick-up in economy will serve as key catalysts for the country’s housing market next year,” he added.
While Ahmedabad emerged as the most affordable housing market, Mumbai, on the other hand, is the most expensive one. However, on the bright side, the city too witnessed a marked improvement in its affordability ratio – from 93 per cent in 2010 to over 61 per cent in 2020.
Knight Frank’s Affordability Index tracks the fluctuation in key real estate variables such as property prices and home loan interest rates. It also captures the EMI to income ratio for an average household. All of these factors determine homebuyers’ potential of buying a house. With many people working remotely and safety and security being the top priority for consumers amid the pandemic, demands for mid-income and affordable housing has been picking up. Therefore, a considerable growth for the sector is foreseen in the coming year as well.