Affordability across the seven key residential markets in India started to improve from 2014 onwards until affordability hit its peak by end of 2021.

Mumbai has been the fastest-moving city in terms of its Home Purchase Affordability Index score improvement and became an affordable market with its threshold hitting 100. It is likely to slip below the threshold value of an affordable market but only slightly given all the macroeconomic headwinds and remain much above its HPAI low of 43 in 2013.

 

Affordability was at its lowest for all cities in 2013, with Mumbai being the most unaffordable with the average household income being enough to just qualify for a home loan to purchase less than half the size of a 1,000 sq. ft apartment. A Global real estate services companies Research’s analysis reveals that between 2013 and 2021, affordability increased consistently across all cities and hit peak values, marking the best time for home purchases.

“What remains pertinent is that we are coming off an 18-month period of a robust recovery in residential demand even as prices and interest rates have moved up during the latter part of this timeframe. And affordability despite the estimates of a decline will remain quite attractive and second best only to 2021”.

 

It is a worth recognizing fact that homebuyers take into account prevailing economic scenarios, employment market prospects, income and job stability and future expectations of income, savings and inflation.

 

Kolkata, with a value of 192 (a value of more than 100 implies that an average household has more than enough income to qualify for the home loan) is still on track to remain the most affordable residential market in the country among the top seven cities, while Pune (183) and Hyderabad (174) will follow.

 

In 2022, affordability gains have been slightly mitigated as inflationary pressures have caused developers to pass on the rise in input costs to the buyers, demand has supported price increases and the RBI’s repo rate hikes have resulted in higher home loan costs.

 

The current year has built on the gains with healthy growth in economic output resulting in household incomes likely to rise by an average of 7%. Residential prices have also risen driven by robust demand and pass-through of rising input costs onto homebuyers with the price growth averaging 4-10% across the major cities.

 

Source: https://m.economictimes.com/