affordability index 2025 Archives - Square Feat India https://squarefeatindia.com/tag/affordability-index-2025/ Real Estate News Website Tue, 24 Jun 2025 06:17:38 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://squarefeatindia.com/wp-content/uploads/2019/12/squrefeatindia_favicon.png affordability index 2025 Archives - Square Feat India https://squarefeatindia.com/tag/affordability-index-2025/ 32 32 In Mumbai, You’ll Need to Spend 48% of Your Salary on EMI to Afford a Home https://squarefeatindia.com/in-mumbai-youll-need-to-spend-48-of-your-salary-on-emi-to-afford-a-home/ Tue, 24 Jun 2025 06:17:37 +0000 https://squarefeatindia.com/?p=9399 Knight Frank India’s 2025 Affordability Index reveals that Mumbai homebuyers need to spend 48% of their salary on EMI — the highest among Indian cities, despite slight improvement due to RBI rate cuts.

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]]> Despite recent interest rate cuts by the RBI, Mumbai continues to be India’s most unaffordable city to buy a home, with households needing to spend a whopping 48% of their monthly income on home loan EMIs, according to Knight Frank India’s latest Affordability Index for H1 2025.

📊 Affordability Index – EMI as % of Household Income

CityH1 2025 EMI/Income RatioMost Recent Trend
Ahmedabad18%Improved
Pune22%Improved
Kolkata23%Improved
Hyderabad30%No change
Chennai24%Improved
Bengaluru27%Stable
NCR (Delhi)28%Worsened
Mumbai48%Improved, but still highest

Source: Knight Frank India, H1 2025

🏠 What Does 48% Affordability Mean?

📌 Simply put: If you earn ₹1,00,000 a month in Mumbai, you’ll spend ₹48,000 on your home loan EMI — leaving you with ₹52,000 for everything else (groceries, kids’ fees, travel, savings).

✅ Why it matters:
According to banks and global standards, an EMI above 50% of income is considered unaffordable. This means many homebuyers in Mumbai either:

  • Stretch their budget beyond safety limits
  • Depend on double incomes
  • Or compromise on home size or location

📉 Mumbai Drops Below 50% Mark — A First

🟢 “For the first time ever, Mumbai’s affordability level has dropped below the 50% threshold,” said the Knight Frank report.

This improvement is credited to the RBI’s 100 basis points repo rate cut in 2025, which lowered home loan interest rates and made EMIs lighter for borrowers.

🧮 Example: EMI Comparison – Mumbai vs. Ahmedabad

CityAvg. Monthly IncomeEMI (Based on Affordability %)
Mumbai₹1,00,000₹48,000
Ahmedabad₹1,00,000₹18,000

🟡 Mumbai homebuyers pay over 2.5x more of their salary in EMI than those in Ahmedabad.

⚠ NCR Only City Where Affordability Worsened

Despite the repo rate cut, affordability in NCR worsened — EMI burden rose from 27% to 28%. This was due to steep property price hikes, which outweighed the benefit of lower interest rates.

📦 Expert Insight: What’s Next for Buyers?

🗣 “Affordability plays a critical role in sustaining demand. With strong GDP growth and lower interest rates, we expect housing momentum to remain positive in 2025,”
— Shishir Baijal, CMD, Knight Frank India

📈 Affordability Trends Over the Years (Mumbai)

YearEMI to Income Ratio
201093%
202061%
202450%
H1 202548%

Gradual but significant improvement in a decade.

🏁 Conclusion: Mumbai is Still a Dream – But a Costly One

Even with rate cuts and economic growth, owning a home in Mumbai remains a financial stretch for the average household. The small drop in EMI burden is a step in the right direction, but unless home prices stabilize or incomes rise faster, true affordability may still be a distant goal for many.

Also Read: Home Purchase Affordability Index

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