India’s housing market has just delivered its most unexpected news in years — buying a home in Tier I cities is now twice as affordable as it was in 2010.
A new report shows affordability has strengthened dramatically despite rising prices, driven by a powerful combination of income growth, cheaper credit, and massive infrastructure expansion.

Below is the full, detailed breakdown 👇

Home Affordability in India Doubles in 15 Years — Income Rise, Policy Push, and Infrastructure Boom Rewrite the Market

Affordability Improves Sharply Across Tier I Cities

A new Colliers India report reveals that the average Price-to-Income (P/I) ratio — the most widely used measure of housing affordability — has dropped from 88.5 in 2010 to 45.3 in 2025.

This means an average homebuyer today needs almost half the years of income to buy the same size home compared to 15 years ago.

Why this matters:

A lower P/I ratio = higher affordability = stronger purchasing power.

This shift has been driven primarily by:

• Average income growing at ~10% CAGR
• Average housing prices rising only 5–7% CAGR

Cities like Ahmedabad, Hyderabad, Bengaluru and Pune have emerged as the most affordable among the Tier I markets.

What’s Fueling This Big Affordability Jump?

1. Rising Incomes Outpacing Housing Prices

Income levels have more than quadrupled since 2010.
Home prices did rise — but at a much slower pace than salary increases.

This widening gap directly boosted affordability.

2. Massive 10X Surge in Home Loan Credit

India’s residential loan book has exploded:

• ₹3 lakh crore in 2010 → ₹30+ lakh crore in 2025
• Housing now accounts for 17% of all bank credit (up from 10% in 2010)

This shows both:

• Banks’ confidence in the sector
• Homebuyers’ ability to borrow and repay

3. Policy Push: RERA, PMAY, SWAMIH, GST, NBFC cleanup

The last decade brought unprecedented regulatory clean-up:

• RERA improved transparency
• PMAY boosted low-income homeownership
• SWAMIH rescued 100+ stuck projects
• GST rationalization lowered material costs
• Monetary policy kept home loan rates attractive

In 2025, the repo rate is down to 5.5%, with further cuts likely due to soft inflation — supporting affordability even more.

Infrastructure Is Redefining Housing Markets

Expressways, metro lines, new airports, and decentralized office hubs are pushing demand to suburban and peripheral markets.

This has created:

• New residential corridors
• Lower entry prices away from city centers
• Improved connectivity reducing commuting time

The price gap between central and peripheral areas has narrowed in most cities — and will continue to shrink as infrastructure ramps up.

City-Wise Highlights (P/I Ratio Improvements)

What Does This Mean for Homebuyers?

1. Buying Power Is Strongest in 15 Years

With income rising faster than prices + lower interest rates → more people can afford homes today.

2. Peripheral Markets Offer The Best Deals

Price arbitrage between central and suburban locations is flattening — meaning prices will rise faster in outskirts in coming years.

3. Mortgage Availability Has Never Been Better

Banks are lending aggressively — housing loans are now the single largest retail lending category in India.

4. Demand Will Stay High

Developers may still push premium housing, but middle-income and affordable segments will see increased institutional attention.

Also Read: CSR Funds to Fuel Affordable Homes in Maharashtra