According to a survey released on Wednesday, home affordability has not changed in the first half of this year despite the fact that interest rates have not changed since the end of 2023.
Ahmedabad has the most cheap housing market among the top eight cities, with a ratio of 21%, according to Knight Frank India’s Affordability Index.
Pune and Kolkata come next, each with a 24 percent share. The only city that was still just beyond the cutoff point at 51% was Mumbai.
Maintaining homebuyer demand and sales momentum is crucial for maintaining stable affordability, which serves as a major economic catalyst for the nation.
According to Shishir Baijal, Chairman and Managing Director of Knight Frank India, “end-users’ financial confidence is significantly bolstered as income levels rise and economic growth strengthens, encouraging them to make longer-term financial commitments toward asset creation.”
The RBI’s robust GDP growth estimate of 7.2% for FY 2025, coupled with steady interest rates, suggests that income and affordability levels would sustain homebuyer demand in 2024, he said.
The eight most important Indian cities showed consistent development between 2010 and 2021, particularly during the epidemic when the RBI lowered the policy repo rate (REPO) to all-time lows.
In response to rising inflation, the central bank increased the REPO rate by 250 basis points over the course of nine months, beginning in May 2022.
In 2022, this affected affordability in all cities. The results demonstrated that solid income growth has assisted in offsetting growing costs and relatively high interest rates, bringing affordability back to the current levels, since the REPO rate has been stable since February 2023.
Since 2023, demand has been increasing, and in H1 2024, it reached multi-year highs.
According to the research, as long as economic development stays on course, the steady interest rate scenario should continue.
