Hyderabad Housing: 41% of Income Goes to EMIs, Third Least Affordable in India
Hyderabad remains the third least affordable residential market among India's eight major cities, with households spending 41% of their monthly income on home loan EMIs, according to Knight Frank India's latest Affordability Index for the first half of 2024. This ratio is unchanged from the end of 2023, despite the Reserve Bank of India (RBI) cutting interest rates by a cumulative 125 basis points.
The Affordability Index measures the proportion of household income needed to fund monthly EMIs for a housing unit. An EMI-to-income ratio above 50% is considered unaffordable, as banks rarely approve mortgages beyond that level.
Only the Mumbai Metropolitan Region (69%) and the National Capital Region (67%) have higher EMI-to-income ratios than Hyderabad (41%). Bengaluru stands at 35%, followed by Chennai (29%), Pune (28%), Kolkata (25%), and Ahmedabad (23%) — making Ahmedabad the most affordable among the eight cities analysed.
The report notes that six of the eight cities remain within the affordability threshold of 50%. Affordability worsened marginally in Bengaluru and the National Capital Region compared with 2023, while Hyderabad and the other markets remained broadly stable. Lower borrowing costs from the RBI's rate cuts are expected to support housing demand through the rest of 2024.
Knight Frank said housing affordability across India's major cities improved steadily between 2016 and 2021, getting an additional boost during the pandemic when the RBI cut policy rates to record lows. Affordability then deteriorated after the central bank raised the repo rate by 250 basis points between May 2022 and early 2023 to curb inflation. Recently, cumulative monetary easing has improved home loan affordability, but rising residential property prices have moderated these gains.