Welcome to our insightful exploration of the “Most Expensive and Cheapest Cities in India,” a comprehensive analysis brought to you through the lens of Knight Frank’s authoritative report. In this engaging blog post, we navigate through the complications of urban affordability, uncovering the cities that resonate with both opulence and economy.
Discover the engaging findings that shed light on the contrasting financial landscapes of India’s urban centers, offering valuable insights for both the curious and the prudent alike.
We’ve crafted an article for you, drawing from a report by the esteemed property consultant, Knight Frank India. The report delves into India’s costliest and most affordable cities.
India’s Most Budget-Friendly or Cheapest City
▪ Ahmedabad is the cheapest city in India to buy a home, according to a new study by Knight Frank India.
▪ The study found that the average resident of Ahmedabad would need to pay just 23% of their income on home loan EMIs, compared to the national average of 30%.
▪ This makes Ahmedabad a more affordable option for homebuyers, especially those on a budget.
What Is Affordability Index Level?
▪ The Knight Frank Affordability Index is a measure of how much income a household needs to earn to afford a home loan in a particular city.
▪ It is calculated by dividing the monthly mortgage payment by the average household income in that city.
▪ A city with an affordability index of 40% means that, on average, households in that city need to spend 40% of their income on their mortgage payments.
▪ An affordability index of 50% or higher is considered unaffordable, as banks are less likely to approve mortgages for these loans.
▪ The index only takes into account the monthly mortgage payment and does not factor in other costs associated with homeownership, such as property taxes, insurance, and maintenance.
▪ The index is based on the average household income, so it may not be accurate for all households. For example, a household with a single income may find it more difficult to afford a home than a household with two incomes.
▪ The index is also based on the current interest rates. If interest rates rise, the affordability index will also rise.
▪ Overall, the Knight Frank Affordability Index is a useful tool for understanding how affordable it is to buy a home in a particular city. However, it is important to keep in mind the limitations of the index and to consider other factors when making a decision about homeownership.
Most Expensive City In India
▪ Mumbai is the most expensive city in India for homebuyers, with an average household having to spend more than half of their income on mortgage payments. The city’s home loan EMI to income ratio is a staggering 55%, making it the least affordable city in the country.
▪ Hyderabad is the second most expensive city, with an EMI to income ratio of 31%. The Delhi National Capital Region (NCR) is third, with an EMI to income ratio of 30%.
▪ Chennai and Bengaluru are tied for fourth place, with an EMI to income ratio of 28%. Pune is fifth, with an EMI to income ratio of 26%. Kolkata is sixth, with the same EMI to income ratio as Pune.
▪ Ahmedabad is the most affordable city for homebuyers, with an average household having to spend only 23% of their income on mortgage payments.
▪ These EMI to income ratios have increased by about 1-2 percentage points across cities over the past year, due to the Reserve Bank of India’s (RBI) increase in its benchmark lending rate by 250 basis points. This has resulted in an average 14.4% rise in the EMI load across all cities.
▪ The rising cost of homeownership is making it increasingly difficult for people to afford to buy a home, especially in the major cities. This is a trend that is likely to continue in the coming years, as interest rates remain high and property prices continue to rise.
▪ The data is based on a fixed dwelling size, a loan period of 20 years, and an 80% loan-to-value ratio. This means that the actual EMI to income ratio for a particular household may be higher or lower, depending on the size of the dwelling, the length of the loan, and the amount of the down payment.
▪ The data is also based on the current interest rates. If interest rates rise, the EMI to income ratio will also rise.
Frequently Asked Questions
Mumbai is the most expensive city in India as per the latest Knight Frank India Report.
Mumbai takes the lead as the most expensive city for homebuyers, requiring over half of their income (55%) to cover mortgage payments.
The Knight Frank Affordability Index is a metric used to gauge the proportion of household income required to afford a home loan in a specific city. It calculates the monthly mortgage payment as a percentage of the average household income, offering insights into the affordability of homeownership.
As per the Knight Frank Report, Ahmedabad emerges as the most affordable city for homebuyers, with households needing only 23% of their income for mortgage payments.
EMI to income ratios have shown a moderate increase of approximately 1-2 percentage points across cities over the last year. This change is attributed to the Reserve Bank of India’s upward adjustment of its benchmark lending rate by 250 basis points.
The rising cost of homeownership is caused by multiple factors, including higher interest rates and escalating property prices, especially in major cities.