By buld_online 
Housing affordability across India’s major cities has significantly improved in the first half of 2025, with Ahmedabad, Pune, and Kolkata emerging as the most budget-friendly urban markets, according to Knight Frank India’s latest Affordability Index. This upward trend in affordability has been largely driven by the Reserve Bank of India’s (RBI) 100 basis point cut in the repo rate since February 2025, which has helped reduce Equated Monthly Instalments (EMIs) for home loans and eased financial pressure on buyers.
Ahmedabad leads the affordability rankings with an index ratio of just 18%, indicating that households spend only that fraction of their income on home loan EMIs. Pune follows at 22% and Kolkata at 23%, making them the top three most affordable metros in India for housing. The index considers a 40% threshold as the limit of affordability, meaning, the lower the percentage, the more affordable the market.
In a landmark development, Mumbai’s affordability index dropped below the 50% mark for the first time since the index’s inception. The index fell from 50% in 2024 to 48% in H1 2025, signifying the city’s most affordable period in recent history. This shift is credited to reduced home loan rates that have made monthly repayments slightly more manageable in the country’s most expensive housing market.
Conversely, the National Capital Region (NCR) saw a marginal decline in affordability. Households in NCR now allocate 28% of their income towards housing, up slightly from previous figures due to rising residential prices, despite interest rate relief.
“Affordability plays a critical role in maintaining homebuyer demand and sustaining sales momentum, both of which are vital contributors to the broader economy,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India. He added, “As incomes grow and the economy gains strength, financial confidence among end-users improves, motivating them to commit to long-term investments such as home ownership. Given the RBI’s healthy 6.5% GDP growth estimate for FY 2026 and a favourable interest rate scenario, affordability levels are expected to be supportive of homebuyer demand in 2025.”
The RBI’s recent policies—including its neutral stance on rates and a reduction in the Cash Reserve Ratio (CRR)—have also injected greater liquidity into the system. These measures have lowered the cost of borrowing and unlocked substantial funds for lending, directly benefiting homebuyers and developers alike.
This improved affordability is further bolstered by a favourable macroeconomic environment, with controlled inflation, improving wage levels, and steady GDP growth. As a result, the Indian housing sector is witnessing a resurgence, and current affordability levels are among the best observed since the post-pandemic period.