For homebuyers in India, affordability is increasingly determined by how much of their monthly income goes towards a home loan rather than the price of a property alone. While some cities continue to offer a relatively manageable route to homeownership, others are becoming increasingly expensive as property prices outpace income growth.
Ahmedabad ranks as India’s most affordable major housing market, with home loan equated monthly instalments (EMIs) accounting for 23% of an average household’s income, according to Knight Frank India’s Housing Affordability Index for the first half of 2026. Kolkata follows at 25%, while Pune and Chennai record affordability ratios of 28% and 29%, respectively.
At the other end of the spectrum, the Mumbai Metropolitan Region (MMR) and Delhi-NCR remain the country’s least affordable housing markets. Home loan EMIs account for 69% of average household income in MMR and 67% in Delhi-NCR, leaving families with considerably less room for savings, daily expenses and other financial commitments.
The figures underline a growing divide between India’s housing markets, where local income levels, property prices and borrowing costs determine how comfortably households can afford a home.
Ahmedabad Tops the Affordability Rankings
Ahmedabad’s position at the top of the affordability rankings reflects a comparatively favourable relationship between household incomes and housing costs. With EMIs consuming less than a quarter of an average household’s income, buyers in the city face a lower repayment burden than those in most other major urban markets.
Kolkata ranks second, with an affordability ratio of 25%, followed by Pune at 28% and Chennai at 29%. Bengaluru, at 35%, and Hyderabad, at 41%, occupy the middle of the rankings, where homeownership remains relatively more manageable than in the country’s most expensive metropolitan markets.
The index measures the proportion of household income required to service the EMI on a housing unit. A lower ratio generally indicates greater affordability, as households retain a larger share of their earnings after meeting home loan obligations.
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Mumbai and Delhi-NCR Face the Greatest Affordability Pressure
The affordability challenge is most pronounced in MMR and Delhi-NCR, where high property prices translate into substantial monthly repayments relative to household earnings.
In MMR, the average household would need to allocate 69% of its income towards a home loan EMI. Delhi-NCR follows closely, at 67%. Such high repayment ratios leave limited financial flexibility, particularly for households managing education expenses, healthcare costs, retirement savings and other routine outgoings.
The pressure also raises concerns for first-time buyers, who may have to choose smaller homes, consider locations farther from employment centres or postpone their purchase altogether.
Infrastructure improvements and access to employment hubs continue to support housing demand in major metropolitan markets. However, these advantages can also contribute to rising property values, particularly in established locations and corridors benefiting from improved connectivity.
As prices rise, the ability of household incomes to keep pace becomes a crucial factor in determining whether homeownership remains within reach.
Luxury Housing Reshapes the Affordability Equation
One of the key developments in India’s residential market is the growing emphasis on premium and luxury housing. Developers have increasingly focused on higher-value homes, responding to demand from affluent buyers and households seeking larger residences and upgraded amenities.
This shift has implications for affordability, particularly in markets where land availability is limited and construction costs remain elevated. Strong demand, rising land values and infrastructure-led development can add to price pressures, making it harder for buyers in lower and middle-income groups to find homes within their budgets.
Property prices rising faster than household incomes can further widen the gap between the cost of buying a home and what a typical family can afford to repay.
The trend also affects the supply of affordable housing. When developers prioritise premium projects, the availability of homes at lower price points can become more constrained, particularly in high-demand urban centres.
For homebuyers, this means that a city’s overall affordability ranking may not tell the whole story. Prices can vary significantly between neighbourhoods, and a relatively affordable city can still have locations where homeownership is financially demanding.
Lower Borrowing Costs Offer Some Relief
Borrowing costs are another important component of housing affordability. A reduction in home loan interest rates can lower monthly EMIs, improving a buyer’s ability to service a loan without increasing household income.
However, lower borrowing costs alone may not be enough to offset the impact of rising property prices. If the cost of a home increases faster than earnings, the benefit of a lower interest rate can be partly eroded.
The EMI-to-income ratio therefore offers a useful way to assess the financial burden of homeownership. It also highlights the importance of evaluating a property purchase against household earnings, existing financial obligations and long-term savings goals rather than relying solely on the advertised price or the size of the loan available.
Choosing a City Beyond the Price Tag
Ahmedabad, Kolkata and Pune currently offer a more favourable affordability equation than Mumbai and Delhi-NCR, according to the H1 2026 rankings. Bengaluru and Hyderabad occupy an intermediate position, while MMR and Delhi-NCR remain under considerable pressure.
However, affordability is only one part of a homebuying decision. Employment opportunities, commuting times, access to social infrastructure, the location of a property and the potential for future income growth also influence a household’s choice.
For prospective buyers, the more useful question is not simply where property prices are lowest, but where the cost of homeownership can be sustained without compromising other financial priorities.
The latest rankings show that India’s housing markets are moving at different speeds. While Ahmedabad remains the most affordable major market, the high EMI burden in Mumbai and Delhi-NCR highlights the growing challenge of matching housing costs with household incomes. As developers continue to cater to premium demand, the availability of homes that remain within the reach of average-income households will be an important factor shaping the next phase of India’s residential market.
