Mumbai: Homebuyer affordability remained stable across most major residential markets in the first half of 2026, with six of India's eight largest cities staying within the affordability threshold as lower borrowing costs continued to offset rising property prices.
Ahmedabad remained the country's most affordable housing market, with monthly home loan instalments accounting for 23% of household income, followed by Kolkata at 25% and Pune at 28%, according to Knight Frank India assessment of housing affordability. A ratio of monthly loan instalments to household income of 50% is considered the affordability threshold.
The RBI's cumulative 125-basis-point rate cuts since February 2025 have helped support affordability despite rising residential prices. However, the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) remained above the affordability benchmark.
"Housing affordability remains a key driver of residential demand," said Shishir Baijal, international partner, CMD, Knight Frank India. "The cumulative benefit of lower interest rates continues to support homebuyers across most markets, helping sales remain close to post-pandemic highs."
"Over the years, affordability gains have moderated mostly due to the rise in property prices. However, healthy employment, stable incomes and supportive financing conditions continue to underpin demand," he said. Among major markets, Ahmedabad retained its position as one of India's most affordable housing markets, supported by moderate property prices, infrastructure development and strong end-user demand. "Ahmedabad has consistently remained an end-user-driven market where housing demand is supported by relatively affordable prices, steady economic growth and improving infrastructure," said Jaxay Shah, chairman, Savvy Group. "While lower interest rates have certainly helped improve affordability, the city's balanced price appreciation has ensured that homeownership remains accessible to a wider section of buyers." "Going forward, sustained income growth and infrastructure-led development will be key to preserving this advantage," said Shah.
Affordability deteriorated marginally in Bengaluru, where the affordability ratio rose to 35% in the first half of 2026 from 34% a year earlier. Affordability in NCR weakened marginally, with the ratio rising to 67% from 66%, while the remaining cities were largely unchanged. MMR remained India's least affordable residential market, with an affordability ratio of 69%, the study showed. Weighted average prices of affordable homes rose 6-18% year-on-year in NCR and 3-5% in MMR. The other six cities recorded price growth of 3-8%. Housing affordability improved steadily between 2016 and 2021 as pandemic-era low interest rates reduced borrowing costs. The trend reversed in 2022 after the RBI raised the repo rate by 250 basis points. Since then, rate stability and, more recently, cumulative monetary easing have helped restore affordability even as residential prices continued to rise. The RBI kept the repo rate unchanged at 5.25% in its February and June 2026 meetings. Despite higher inflation forecast and geopolitical risks, the cumulative impact of earlier rate cuts continues to support housing affordability.
