Hyderabad Second Most Expensive Residential Market

Knight Frank India has said in its proprietary report Affordability Index that Hyderabad is the second most expensive residential market in the country.

The affordability index of the city has remained unchanged at 30% for three years (2022, 2023 and 2024) now.

Knight Frank India's Affordability Index tracks the EMI (Equated Monthly Instalment) to income ratio for an average household. This implies that on an average a household in Hyderabad needs to spend 30% of its income to pay EMI for housing loan.

According to the index, home affordability has remained favourable for homebuyers in 2024 as interest rates have stayed relatively steady since the end of 2023. Ahmedabad is the most affordable housing market among the top eight cities, with an affordability ratio of 20%, followed by Pune at 23% and Kolkata at 24%. Mumbai was the only city to exceed the affordability threshold, standing at 50%, albeit affordability has improved.

Home affordability had witnessed steady improvement from 2010 to 2021 across the eight leading cities of India, especially during the pandemic when the Reserve Bank of India (RBI) reduced the policy repo rate to decadal lows. However, the RBI raised the repo rate by 250 basis points (2.5%) over nine months starting May 2022 to tackle high inflation, thus affecting affordability across cities in 2022.

Since February 2023, however, the repo rate has remained unchanged while incomes have seen healthy growth, which has helped offset rising home prices and relatively high interest rates, supporting affordability. The stable interest rate scenario was likely to persist in the near term, as the India's economy remained on a healthy growth trajectory, said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Housing demand was growing at an annualised rate of 23% since 2020, and was expected to scale multi-year highs in 2024, he added.