Ahmedabad is the most affordable housing market in the country: Knight Frank India

• Increased home loan rate impacts affordability,however, demand remains strong
• Mid and premium end of the market drive sales volumes

Ahmedabad, August 16, 2023: Knight Frank India in its proprietary Affordability Index cited that higher home loan rates have reduced affordability across all markets so far in 2023. As per the assessment of the affordability index, despite the change, Ahmedabad is the most affordable housing market amongst the top eight cities, with a ratio of 23% followed by Pune and Kolkata at 26% each.

Knight Frank’s Affordability Index tracks the EMI (Equated Monthly Instalment) to income ratio for an average household, has witnessed steady improvement from 2010 to 2021 across the eight leading cities of India especially during the pandemic when the Reserve Bank of India (RBI) cut REPO rates to decadal lows.

The central bank has raised the REPO rate by 250 bps since then to address growing inflation. This has impacted affordability by an average of 2.5% across cities and increased the EMI load by 14.4% since then. However, demand has remained unimpaired and has sustained at the multi-year highs seen in H1 2023.

Incidentally, the RBI has refrained from raising rates in the past three consecutive Monetary Policy Meetings as economic fundamentals continue to show strength and the inflation forecast remains within the upper tolerance limit of 6%.