Ahmedabad still most affordable housing market: Report

AHMEDABAD: The interest rate increases by the RBI has reduced affordability for Ahmedabad home buyers, but the city is still the most affordable housing market of India’s eight biggest cities. It had an affordability score of 22%, according to the Knight Frank India report ‘Affordability Index for H1 2022’.
The report states that all markets saw affordability decline due to higher home loan interest rates as a result of the 90bps increase in the repo rate. Ahmedabad is followed by Pune and Chennai, both at 26%, for the first half of 2022.
Knight Frank’s proprietary Affordability Index, which tracks the EMI (equated monthly instalments) to income ratio for an average household, improved steadily from 2010 to 2021 in the eight largest cities of India, especially during the pandemic, when the Reserve Bank of India (RBI) cut repo rate to decadal lows. However, the cumulative 90bps increase in repo rate by the RBI in two revisions has led to home affordability falling by an average of 2% across markets, and increased EMI load by 6.97%, the report said.
“Ahmedabad has since 2019 consistently been the most affordable city in India. From 46% in 2010, affordability improved to 25% in 2019. With the advent of the pandemic in early 2020, affordability further improved to 24% in 2020 and to 20% in 2021. In the first half of 2022, the affordability score of the city was 22%,” the report said.
Vivek Rathi, director (research), Knight Frank India said, “The interest rate increase and costlier houses have affected affordability, but households in Ahmedabad can still buy houses for an EMI that is 22% of their monthly household income. We will have to look at future monetary policy because it is likely that the RBI will increase rates further.”