The Indian real estate market is currently experiencing a bull run, marked by soaring prices and escalating demand. At the same time, household incomes across the top 10 cities increased at a CAGR of 5.4%, while property prices surged at a CAGR of 9.3% (between 2020 and 2024). At a time when this growing gap in income and property price growth rates has weakened affordability, property buyers are looking for affordable home markets in metro cities where they can invest.
Considering that the property Price to Annual Household Income Ratio (P/I Ratio) in India has increased from 6.6 in 2020 to 7.5 in 2024, higher than the globally accepted benchmark of 5, Chennai, Ahmedabad and Kolkata have emerged as the most affordable cities for residential investments in 2024. On the other hand, Mumbai Metropolitan Region and Delhi are today the least affordable markets for residential property investment.
Furthermore, the EMI-to-monthly income ratio in India has risen from 46% in 2020 to 61% in 2024, indicating a growing burden of EMIs on home buyers and reflecting affordability concerns nationwide, especially in metros. The trend is more pronounced in MMR (116%), New Delhi (82%), Gurugram (61%) and Hyderabad (61%). In contrast, cities like Ahmedabad (41%), Chennai (41%) and Kolkata (47%) are relatively more affordable.
Investment Destinations
The price-to-annual income ratio across different cities indicates where prospective homebuyers can afford housing.
If this ratio is within 5, it indicates affordability, if it is between 5 and 8, it points to unaffordable and a ratio of more than 8 means extremely unaffordable. The proportion of property price to annual household income indicates the level of affordability Magicbricks.com
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