Hyderabad ranks second in India’s expensive housing markets, Knight Frank report reveals

Hyderabad maintained an unchanged affordability index of 30 per cent for both 2022 and 2023, despite a significant surge of 11 per cent in home prices during the last year.

Hyderabad: Hyderabad has secured the spot as the second most expensive residential market in the country, according to Knight Frank India’s proprietary Affordability Index. The city maintained an unchanged affordability index of 30 per cent for both 2022 and 2023, despite a significant surge of 11 per cent in home prices during the last year.

The Affordability Matrix for Hyderabad showcased a steady decline over the years: from 47 per cent in 2010 to 30 per cent in 2022 and persisting at 30 per cent in 2023. This index portrays the proportion of income required by a household to finance the monthly instalments (EMI) of a housing unit in a particular city.

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Meanwhile, Ahmedabad retained its position as the most affordable housing market in India with an affordability ratio of 21 per cent in 2023. Kolkata and Pune followed closely at 24 per cent each in 2023.

On the other hand, Mumbai stood out as the sole city surpassing the affordability threshold of 50 per cent, deemed by banks as a level where mortgage underwriting becomes rare.

The National Capital Region (NCR) witnessed an improvement in its affordability index from 29 per cent in 2022 to 27 per cent in 2023. Bengaluru secured the fourth spot among expensive markets, displaying an affordability index of 26 per cent in 2023.

Shishir Baijal, Chairman & Managing Director of Knight Frank India, expressed optimism for the future. “Anticipating stable GDP growth and moderation in inflation in FY 2024-25, affordability is expected to strengthen,” Baijal stated. “Further, if the RBI decides to lower the repo rate later in 2024 as is widely expected leading to a reduction in home loan interest rates, the affordability of homes in 2024 could see a noteworthy enhancement, providing a comprehensive boost to the sector,” he added.

The Knight Frank Affordability Index offers insight into the income proportion required by households to fund housing loan EMIs in various cities. An EMI/Income ratio exceeding 50 per cent is considered unaffordable, often leading to banks avoiding mortgage underwriting.