Housing in Bengaluru is more affordable than Hyderabad: Report

Hyderabad: The city has emerged as the second most expensive housing market in India surpassing Bengaluru, according to Knight Frank India’s Affordability Index 2024.

According to the report, Hyderabad’s affordability ratio has remained at 30 percent for the past three years meaning that an average household in Hyderabad spends 30 percent of its income on home loan EMIs. This puts Hyderabad just below Mumbai, which is still the least affordable market with a 50 percent EMI-to-income ratio.

Ahmedabad, Pune, among the most affordable cities

The Knight Frank India’s Affordability Index measures the proportion of household income needed to pay for housing loan EMIs across major cities like Hyderabad. Ahmedabad with the lowest affordability ratio at 20 percent is the most affordable followed by Pune, Kolkata, Bengaluru and NCR (both at 27 percent) with Chennai at 25 percent.

The report credits stable housing affordability to consistent interest rates and rising incomes that have helped to offset increasing property prices. Home affordability has improved significantly between 2010 and 2021, thanks to lower interest rates and steady economic growth.

During the pandemic, the RBI reduced the policy repo rate to historic lows which improved housing affordability in metropolitan cities like Hyderabad, Chennai and Mumbai. 

However, the RBI increased the repo rate by 250 basis points from May 2022 to February 2023 to address inflation, temporarily tightening affordability in the markets. Since February 2023, the repo rate has remained unchanged and the continued growth of household incomes has helped sustain affordability despite increasing housing costs.

Hyderabad’s housing affordability ratio consistent since 2022

Since 2022, Hyderabad’s housing market affordability ratio has remained consistent at 30 percent.

Mumbai while improving from 67 percent in 2019 to 50 percent in 2024 is still the only city where housing costs exceed the affordability threshold. Whereas Bengaluru saw a slight decline in affordability with households spending 27 percent of their income on housing in 2024 compared with 26 percent the previous year. However, this remains well within the affordable range defined as an EMI-to-income ratio below 50 percent.