Mumbai homes turn more affordable for first time ever as EMI burden falls below 50%: Report

Knight Frank India, while releasing its Affordability Index, said in a report that homebuyers' affordability has improved in 2025 due to a significant decline in interest rates from the end of 2024. The Index, which measures the proportion of household income that is spent on EMIs, showed steady improvement across eight major cities in India between 2010 and 2021.

Ahmedabad, Pune and Kolkata have emerged as the most affordable housing markets, while Mumbai has crossed a significant milestone in terms of affordable housing for the first time, the report highlights.

Among the top eight cities, Ahmedabad is the most affordable housing market with a ratio of 18 per cent, followed by Pune and Kolkata at second and third positions with 22 per cent each, the Affordable Housing Index showed. Housing affordability has improved significantly in Mumbai, where the EMI-to-income ratio has dropped to 47 per cent. This is the first time in the city's history that housing affordability has fallen below the 50 per cent threshold, signalling a new and more sustainable level of housing affordability.

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Mumbai has seen a significant improvement, with the EMI-to-income ratio falling to 47 per cent, marking the first instance of the city falling below the 50 per cent affordability threshold, where housing typically becomes financially stressful for buyers.

Housing affordability has steadily improved over the past decade due to rising incomes and favorable interest rate cycles. During the pandemic, affordability strengthened sharply as the Reserve Bank of India (RBI) lowered policy rates to historically low levels.

However, a total of 250 basis points of repo rate hikes between May 2022 and early 2023 led to a temporary decline in affordability.

With interest rates stabilising from February 2023 and a subsequent rate cut of 125 basis points cumulatively since February 2025 amid moderating inflation, affordability levels have once again improved in most cities. This environment has helped residential sales remain close to the post-pandemic peaks achieved in 2024 and is expected to support demand in 2026 as well.

While most cities saw stability or improvement in affordability, the National Capital Region (NCR) was the only market that recorded a marginal decline. Knight Frank attributed this to a sharp increase in weighted average prices due to increased activity in the premium housing segment. Despite this, housing affordability in the NCR remains within acceptable limits.

With ANI Inputs