Knight Frank Says 2025 Housing Affordability Up in 7 Cities
The supportive interest rate environment is likely to continue into 2026, underpinned by the Indian economy’s sustained and stable growth momentum
Mumbai: House purchase affordability for homebuyers has improved in 2025 across seven of India’s eight major cities following a significant drop in interest rates since late 2024 said Knight Frank India, in its proprietary report, Affordability Index.
Ahmedabad emerged as the most affordable housing market among the top eight cities, with households spending just 18 per cent of their income to fund the monthly instalment of EMI on a home loan, followed by Pune and Kolkata at 22 per cent. In Mumbai, housing affordability has improved significantly, with the EMI-to-income ratio declining to 47 per cent in 2025. This marks the first time in the city’s history that affordability has fallen below the 50 per cent threshold, signaling a new and more sustainable level of housing affordability.
Home affordability in Bengaluru and Hyderabad markets remained unchanged as both demand as well as weighted average values saw improvement over the year. Here too affordability was well below the threshold keeping these markets buyer friendly. Chennai also saw improvement, with affordability strengthening to 23 per cent in 2025.
However, the National Capital Region (NCR) was the sole market to see a marginal deterioration in 2025. The decline was driven by a sharp rise in weighted average prices, largely due to increased activity in the premium housing segment. Despite this, NCR’s affordability remains comfortably within acceptable limits, with an EMI-to-income ratio of 28 per cent.
Rate stability from February 2023 onward supported a gradual recovery in affordability conditions. More recently, with economic growth remaining resilient and inflation easing materially, the RBI has reduced the repo rate by 125 bps since February 2025, resulting in a further improvement in affordability across most housing markets. This supportive rate environment has helped residential sales sustain close to the post-pandemic peak recorded in 2024, said the report.
“The supportive interest rate environment is likely to continue into 2026, underpinned by the Indian economy’s sustained and stable growth momentum.”
