Home Affordability In Next 12 Months: Kolkata Most Affordable, Mumbai Near Optimal

Home affordability in India is expected to improve over the next 12 months, with Kolkata maintaining its position as the most affordable major city and Mumbai approaching optimal affordability levels by 2025, according to JLL's Home Purchase Affordability Index.

An anticipated cumulative 50-basis point interest rate cut by the Reserve Bank of India is expected to boost affordability levels across key residential markets. Residential sales are projected to hit a record 3,05,000–3,10,000 units in 2024, with further growth expected in 2025 to reach 3,40,000–3,50,000 units, noted JLL.

Mumbai and Pune are predicted to be near peak affordability levels, driven by steady income growth and moderating price increases. Meanwhile, Kolkata is set to hit new affordability peaks, reaffirming its status as India's most affordable market. Other cities like Bengaluru, Hyderabad, and Delhi NCR will see gradual affordability improvements, though they will remain below peak levels.

The residential market's momentum is supported by resilient demand, income growth, and a projected softening in interest rates. "The combination of healthy income growth, potential rate reductions, and moderate price growth will drive affordability and sustain strong market performance in the medium term," said Samantak Das, chief economist and head of research & REIS, India, JLL.

JLL's data highlights Hyderabad's 132% price growth since 2011, as the highest among major cities, while Mumbai has seen the largest income growth at 189% during the same period. 

JLL noted that 2021 marked the peak affordability levels across all major cities, but rising residential prices and stagnant interest rates through 2022 and 2023 negatively impacted affordability. However, with the expected rate cuts and continued income growth, affordability levels are projected to surpass 2023 figures, creating a favourable environment for homebuyers in 2025.