House purchase affordability in major Indian cities saw significant improvement in 2025, with Ahmedabad ranking as the most affordable among the top eight cities, according to a report by Knight Frank India. Ahmedabad led the Affordability Index with an EMI-to-income ratio of 18 per cent, followed by Pune and Kolkata at 22 per cent.
In Mumbai, the EMI-to-income ratio dropped to 47 per cent, marking the first time the city’s affordability fell below the 50 per cent threshold, indicating a sustainable level of housing affordability. This improvement was attributed to a 125 basis-point cut in the policy repo rate since February 2025, along with resilient economic growth, easing inflation, and rising incomes.
The National Capital Region (NCR) was the only major market to experience a decline in affordability during the year, driven by a significant increase in weighted average prices due to heightened activity at the premium end of the market. Affordability had strengthened across India during the pandemic, supported by the Reserve Bank of India’s (RBI) reduction of the policy repo rate to decade lows.
The report highlighted that the supportive rate environment has helped maintain residential sales close to the post-pandemic peak recorded in 2024. It is forecasted that the supportive interest rate environment will continue into 2026, backed by the sustained and stable growth momentum of the Indian economy.
Shishir Baijal, International Partner, Chairman, and Managing Director of Knight Frank India, emphasized the importance of supportive affordability in sustaining homebuyer demand and sales momentum, which plays a crucial role as an economic driver for the country. He noted that over the past few years, both weighted average prices and income levels have increased rapidly, aligning with the decreasing interest rates to enhance overall home affordability.
