Affordability Trends

The report highlights a significant shift in housing affordability. Between 2020 and 2024, household incomes across India’s top 10 cities grew at a compound annual growth rate (CAGR) of 5.4%, while property prices surged at a CAGR of 9.3%. As a result, the Property Price to Annual Household Income Ratio (P/I Ratio) has risen from 6.6 in 2020 to 7.5 in 2024, surpassing the globally accepted benchmark of 5.

Based on the P/I Ratio, Chennai, Ahmedabad, and Kolkata are identified as the most affordable cities for residential investments in 2024, each with a ratio of 5. In contrast, the Mumbai Metropolitan Region (MMR) and Delhi are the least affordable, with ratios of 14.3 and 10.1, respectively.

Rising EMI Burden

The report also reveals a growing burden on home buyers, with the EMI-to-monthly income ratio increasing from 46% in 2020 to 61% in 2024. This trend indicates mounting affordability concerns, particularly in major metros. The ratio is notably high in MMR (116%), New Delhi (82%), Gurugram (61%), and Hyderabad (61%). Conversely, cities like Ahmedabad (41%), Chennai (41%), and Kolkata (47%) remain relatively more affordable.

Market Outlook

Magicbricks CEO Sudhir Pai noted that residential investments were most affordable between late 2021 and 2022 due to low interest rates and recovering incomes. However, increased demand and rising prices have since challenged affordability. The report predicts a potential equilibrium in the market, with a slowdown in price growth expected due to anticipated increases in residential supply.

Also Read: India Achieves Landmark Transparency in Global Real Estate Market

Investment Insights

The price-to-annual income ratio provides insights into housing affordability across cities. Ratios below 5 indicate affordability, while ratios above 8 suggest high unaffordability. The current data underscores the varying degrees of affordability in different Indian cities, with Chennai, Ahmedabad, and Kolkata emerging as favorable investment destinations amidst rising costs nationwide.

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Mumbai’s Significant Market Contribution

Mumbai continues to play a pivotal role in India’s real estate sector, contributing around 25% of new residential launches and 22% of overall sales in the country from 2022 to mid-2024. The city’s residential sales value during this period has surpassed INR 2.8 lakh crore, representing approximately 31% of the total sales value across India’s top seven markets.

Record-Breaking Sales and Infrastructure Impact

In 2023, Mumbai’s residential sales value exceeded INR 1 lakh crore and is expected to reach INR 1.35 lakh crore in 2024, setting a new benchmark for the city. The reduction in Months To Sell (MTS) inventory—from 58 months in March 2022 to 31 months in June 2024—reflects increased market activity. Key infrastructure projects, such as the Mumbai Trans Harbour Link (MTHL), Navi Mumbai Suburban Rail, and various Metro lines, have significantly enhanced connectivity within the city and its suburbs, driving growth in residential launches and sales, particularly in Navi Mumbai, Thane, and Western Suburbs II.

Shift in Real Estate Dynamics

Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL, noted that Mumbai’s real estate development has transitioned from the southern parts of the city to the northern and eastern suburbs. This shift is driven by the city’s focus on multi-modal transport solutions and ongoing infrastructure projects. By mid-2024, these initiatives are expected to reduce average travel times within the city by 50% and alleviate pressure on existing public transportation systems.

Land Acquisition and Future Developments

Since 2022, developers in Mumbai have acquired over 260 acres of land, either through direct purchase or joint development agreements, earmarked for residential projects. This acquisition translates to a potential development area of 42-48 million square feet, with an estimated sales potential exceeding INR 70,000 crore. Mumbai has also attracted national and regional developers, further fueling the city’s residential market growth.

Outlook and Future Prospects

The report highlights that Mumbai’s residential market is expected to maintain its growth trajectory, despite potential moderation in capital value appreciation. As infrastructure developments like the Coastal Road and Metro expansions continue to progress, they will create opportunities across both the Island City and its suburbs. Navi Mumbai and Thane have emerged as key residential destinations, supported by ongoing infrastructure improvements.

Mr. Prashant Sharma, President, NAREDCO Maharashtra, emphasized that Mumbai’s robust growth underscores the city’s pivotal role in shaping India’s real estate landscape. The continued development of infrastructure and new residential hubs positions Mumbai to set new benchmarks in the coming years.

Looking Ahead

As Mumbai’s real estate market evolves, the city’s shift towards suburban development and infrastructure enhancements will play a crucial role in its future growth. With a wide range of residential opportunities and attractive returns, Mumbai remains a key player in India’s real estate sector, poised to surpass the INR 2 lakh crore mark in residential sales value by 2030.

Also Read: NAREDCO Maharashtra to Host Major Real Estate Forum in Mumbai

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