Chennai, Ahmedabad, Kolkata most affordable for buying houses, says report
Growing gap in income and property price growth rates has weakened affordability
Hyderabad: The Property Price to Annual Household Income Ratio (P/I Ratio) in India has increased from 6.6 in 2020 to 7.5 in 2024 (higher than the globally accepted benchmarks of 5), according to Magicbricks’ flagship report “Housing Affordability in Major Indian Cities.”
The Indian real estate market is currently experiencing a bull run, marked by soaring prices and escalating demand. At the same time, household incomes across the top 10 cities increased at a CAGR of 5 per cent, while property prices surged at a CAGR of 9.3per cent (between 2020-2024). This growing gap in income and property price growth rates has weakened affordability.
Elaborating on the same based on the P/I ratio, the report observed that Chennai, Ahmedabad, and Kolkata are among the most affordable cities for residential investments in 2024, while the Mumbai Metropolitan Region and Delhi emerged as the least affordable, according to the report. Sudhir Pai, CEO, Magicbricks said "Between the latter half of 2021 and 2022, residential investments were at their most affordable. During this period, the market was experiencing a resurgence characterised by low interest rates, recovering household incomes, and modest increase in residential prices.”
“However, homeownership sentiment has since peaked, resulting in demand significantly outpacing available supply, leading to a rapid and substantial surge in residential prices, presenting new challenges for affordable housing," he added.
Furthermore, the report revealed that the EMI-to-monthly income ratio in India has increased from 46 per cent in 2020 to 61 per cent in 2024, indicating a growing burden of EMIs on home buyers and reflecting affordability concerns nationwide, especially in metros. The trend is more pronounced in MMR (116 per cent), New Delhi (82 per cent), Gurugram (61 per cent) and Hyderabad (61 per cent). In contrast, cities like Ahmedabad (41 per cent), Chennai (41 per cent) and Kolkata (47 per cent) are relatively more affordable. The current situation is likely to hit equilibrium conditions with market trends indicating a deceleration in price growth due to an anticipated increase in residential supply, the report added.