Ahmedabad has become the most affordable housing market in the country while Mumbai remains the costliest, according to property consultant Knight Frank India.
The consultant released its Affordability Index 2020, which showed that Ahmedabad was the most affordable housing market in India with an affordability ratio of 24 per cent, followed by Pune and Chennai at 26 per cent each in 2020.
A ratio over 50 per cent makes it difficult to secure home loans from banks and housing finance companies, making it unaffordable to purchase a house, Knight Frank India said.
The affordability index, which tracks the EMI (Equated Monthly Installment) to income ratio for an average household, has shown meaningful improvement in affordability over the last decade.
The consultant said that decline in housing prices and multi-decade low home loan interest rates have helped improve housing affordability in 2020.
"While Mumbai is the most expensive market, with affordability ratio of (61 per cent), other cities like Ahmedabad, Chennai and Pune are relatively more affordable," Knight Frank said.
Even for Mumbai, the affordability ratio has improved from a high of 93 per cent in 2010 to 61 per cent in 2020.
The index captures movement in key constituents like property prices, home loan interest rate and household income that determine the buyer's ability to purchase a house.
City-wide average affordability statistics cannot highlight disparities in housing costs within sub-markets or across the income spectrum, it added.
In NCR, the affordability ratio has improved to 38 per cent from 53 per cent in 2010, while in Bengaluru, the ratio has become better at 28 per cent from 48 per cent a decade ago.
As per the report, the ratio improved to 26 per cent in Pune and Chennai both from 39 per cent and 51 per cent in 2010.
In Hyderabad, the ratio has become better at 31 per cent from 47 per cent, while in Kolkata it improved to 30 per cent from 45 per cent.
The consultant said that affordability ratio improved in Ahmedabad to 24 per cent from 46 percent.
Shishir Baijal, chairman and managing director, Knight Frank India said, "The affordability ratio across top eight cities has improved tremendously over this decade due to an increase in income level, lower interest rate and subsequently lower property prices."