House Purchase Affordability Rises Across India’s Top Cities in 2025
India’s real estate market witnessed a significant boost in housing affordability in 2025. According to Knight Frank India, Ahmedabad topped the Affordability Index with an EMI‑to‑income ratio of just 18%, making it the most accessible city for homebuyers. Pune and Kolkata followed closely at 22%, reflecting a healthy balance between property prices and income growth.
This improvement marks a positive shift for buyers across the country. With lower borrowing costs and stable income growth, more households now find homeownership within reach.
Mumbai Achieves a Milestone in Affordability
Mumbai, traditionally one of India’s priciest markets, saw its EMI‑to‑income ratio drop to 47%, falling below the 50% threshold for the first time. This milestone signals a sustainable level of housing affordability in the city.
Experts credit this improvement to multiple factors. The 125-basis-point cut in the policy repo rate since February 2025 reduced borrowing costs. Meanwhile, the city’s resilient economic growth and rising incomes supported higher purchasing power. Additionally, easing inflation made EMIs more manageable.
As a result, buyers now approach the Mumbai market with renewed confidence, especially in mid- and premium-tier housing segments.
Key Drivers Behind Improved Affordability
Several factors contributed to the rise in housing affordability across India:
- Interest Rate Cuts: RBI’s rate reductions made home loans cheaper, lowering EMIs and financial stress.
- Income Growth: Higher salaries across sectors allowed buyers to stretch budgets without over-leveraging.
- Price Stability: Property prices rose in line with income growth, keeping affordability intact.
- Enabling Financing Environment: Banks offered flexible loan options, longer tenures, and competitive interest rates.
Together, these trends created an environment where buyers in Ahmedabad, Pune, Kolkata, and Mumbai could realistically consider purchasing homes.
NCR Shows Slight Improvement in Affordability
The National Capital Region (NCR) witnessed a slight improvement in housing affordability in 2025. Weighted average property prices increased moderately, but rising incomes and favorable interest rates helped buyers manage EMIs more comfortably.
High-income buyers continued investing in premium properties, while mid-income households benefited from more manageable financing options. The result: a balanced market where affordability strengthened without compromising demand.
Pandemic Policies Continue to Shape Affordability
The COVID‑19 pandemic left a lasting impact on housing affordability. The RBI had lowered policy rates to decade lows, stimulating demand. Post-pandemic, this supportive rate environment persisted, keeping EMIs within reach and sustaining sales.
In addition, the Indian economy maintained stable growth, with inflation moderating and income levels rising. These factors reinforced affordability across cities, even as property prices gradually increased.
Sustained Buyer Confidence Drives Sales
Affordable housing acts as a key driver of buyer confidence. When home loans remain manageable, more buyers enter the market. This, in turn, sustains sales momentum and supports the broader economy.
Shishir Baijal, International Partner, Chairman and Managing Director of Knight Frank India, stated:
Supportive affordability is essential for sustaining homebuyer demand and sales momentum, which in turn acts as a key economic driver for the country. Over the past few years, both weighted average prices and income levels have risen at a faster pace, and in tandem with reducing interest rates, has strengthened overall home affordability.
Expert Insights: Sanjeev Singh, MD, SKJ Landbase
Sanjeev Singh added a practical perspective on the trend:
The 2025 data highlights how urban buyers are increasingly empowered by lower EMIs and rising incomes. Cities like Ahmedabad, Pune, Mumbai, and NCR are now witnessing renewed activity in mid- to high-end housing. For developers, this is the perfect window to introduce projects that combine quality and affordability, ensuring stronger absorption and sustained demand.
What This Means for Homebuyers in 2026
As India enters 2026, housing affordability is likely to remain supportive. The factors behind this trend stable economic growth, controlled inflation, rising incomes, and competitive interest rates show no signs of slowing down.
For buyers, this means:
- EMIs will remain manageable, reducing financial stress.
- Greater access to premium and mid-segment housing without compromising on quality.
- Confidence in long-term property investment, supported by a stable financing environment.
For developers, the takeaway is clear: affordable pricing, flexible financing options, and well-planned projects can capture a larger share of a growing buyer base.
Conclusion
Housing affordability improved significantly in India during 2025, with Ahmedabad, Pune, and Kolkata leading the charge. Mumbai crossed a key milestone, while NCR also strengthened slightly. The combination of lower interest rates, rising incomes, and stable price growth made homeownership more realistic for buyers across the country.
With continued economic stability, 2026 promises a strong year for homebuyers and developers alike. The Indian real estate market is not only recovering but also maturing into a more accessible, balanced, and resilient sector.
