Are you planning to?buy a home in the new year 2024? Well, affordability must surely be on your priority list, right? That is exactly why knowing?which cities in India are the most and least affordable?to?buy a home?is important.?
This will not only help you strike the appropriate deal and land a home within your budget, but it will also prevent you from burning a hole in your pocket in case you end up buying a house in a super expensive city that is beyond your affordability.?
A recently released 'Affordability Index' by Knight Frank India (one of the?world's leading independent real estate consultancies) can serve as a benchmark to reveal the property markets that are affordable.?According to the Affordability Index, these are the most affordable cities to buy a home in India:?
The city of Ahmedabad has emerged as the most affordable housing market in India among major cities. It has an affordability ratio of 21% ¡ª a household in Ahmedabad needs to spend 21% of its household income to pay EMIs on an average, the index indicates, as per ET report.
Maharashtra's city of Pune takes the second place, with 24% affordability ratio in 2023.?
With the 24% ratio level, Kolkata takes the third place in the index.?
The affordability ratio of Chennai stands at 25%, which makes it secure fourth place in the affordability index.
Bengaluru comes fifth in the list, with affordability ratio of 26%, i.e. slightly better from 2022's ratio of 27%.?
Also Read:?Does It Make Sense To Invest Your Surplus Or Prepay Existing Home Loan
In simple terms, the Affordability Index indicates the proportion of income that a household requires to fund the EMI of a housing property in a particular city. Thus, an affordability index level of 40% for a city implies that on average, households in that city need to spend 40% of their income to fund the EMI of a home loan for a unit. An affordability index level of over 50% is considered unaffordable as it is the limit beyond which banks rarely underwrite a mortgage. The affordability index can rise either due? to reduction in prices or due to rise in average income of the city or sometimes both.
The only city that is above the 50% affordability barrier, above which banks hardly ever approve a home loan, is Mumbai. Mumbai, the most costly residential market in the nation, has experienced a 2% improvement in its affordability index, which was 51% in 2023 as opposed to 53% in 2022. The city's affordability levels have significantly improved, rising from 67% in 2019 to 16% in the pre-pandemic period, according to the report.
Hyderabad has the second most expensive residential market in the nation; despite an 11% increase in home prices in 2023, the city's affordability index remained steady at 30% for the years 2023 and 2022. Additionally, the affordability of the National Capital Region (NCR) increased from 29% in 2022 to 27% in 2023.?
According to Knight Frank, anticipated slowdown in inflation and an anticipated downward trend in interest rates should further enhance home affordability in 2024. The Chairman and Managing Director of Knight Frank India, Shishir Baijal, stated.
In FY 2024¨C2025, stable GDP growth and moderate inflation are anticipated, supporting affordability. As per the report, furthermore, affordability is anticipated to improve if the RBI chooses to reduce the repo rate later in 2024, as is generally anticipated, which will result in a drop in home loan interest rates. Furthermore, 2024's affordability of homes could significantly improve if the RBI chooses to lower the repo rate later in the year, as is generally anticipated, which would lower home loan interest rates and give the industry a comprehensive boost.
For the latest and more interesting financial news, keep reading Indiatimes Worth.?Click here |