Hyderabad most affordable residential market: JLL
The survey takes into account a combination of variables like interest rates, household income and price of property
Hyderabad: Hyderabad had been consistently the most affordable residential market in the country, according to JLL’s Home Purchase Affordability Index (HPAI). The index indicates whether a household earning an average annual income (at an overall city level) is eligible for a housing loan on a property in the city, at the prevailing market price. While Hyderabad has shown the highest HPAI in the country from 2011 to 2019, in 2020 (up to October) Kolkata is ahead of Hyderabad.
JLL has derived this index, through a combination of variables which include home loan interest rates, average household income and price of the residential apartment. The interplay between property price, income and home loan interest rates influences the ability of a household to afford a home purchase. JLL has kept the saleable area of the house as 1,000 sq ft for a four-member household.
According to JLL’s interpretation, a value of 100 means that a household has exactly enough income to qualify for the loan, a value less than 100 implies that an average household does not have enough income to qualify for a housing loan, and a value of more than 100 implies that an average household has more than enough income to qualify for the home loan.
Hyderabad showed consistent home purchase affordability since 2014 with its HPAI growing from 136 to 195 in 2020 (estimated). The city had seen a dip in affordability index from 140 in 2011 to 127 in 2012 and a further dip to 111 in 2013. From 2014 onwards, the affordability index improved for the city year-on-year.
With an estimated HPAI of 195 in 2020, Hyderabad ranks higher in affordability compared to Pune with HPAI of 188, Chennai with 178, Bengaluru with 175, Delhi NCR with 136 and Mumbai with 95 (indicating unaffordable). In 2020, Hyderabad is expected to see some competition from Kolkata in terms of affordability.
There is ‘affordable synergy’ in the market with low home loan rates, attractive home prices and flexible payment plans. “Our analysis suggests that despite a fall in household income in 2020, home purchase affordability has increased in 2020 across all the markets. And, this makes ‘now’ a great time for end users to purchase a house. This trend of increasing affordability is likely to continue in the upcoming year, which shall facilitate a broader recovery of the residential market in 2021,” said Ramesh Nair, CEO & Country Head, India, JLL.
Telangana MA&UD and Industries Minister KT Rama Rao recently appealed to real estate developers and industry leaders to keep Hyderabad real estate prices affordable. He said Hyderabad has seen consistent growth in real estate and the city has been known for its best quality of living and affordable real estate.
“Developers should ensure that we don’t lose the USP (unique selling proposition) of the city’s real estate as an affordable city. This will impact the investments and buyer sentiment in future. Let us not rush and get into the rat race of hiking property prices. We will lose the advantage of being an affordable city,” KTR added.
Of the top seven markets in India (Mumbai, Delhi NCR, Bengaluru, Chennai, Pune, Hyderabad and Kolkata), in 2020, Mumbai continues to be the only market below the affordability threshold of 100. However, Mumbai is showing improvement in HPAI from 47 in 2011 to 95 in 2020 (estimated). JLL predicts Mumbai may touch the affordability threshold next year.
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