According to Knight Frank India's latest Affordability Index, Ahmedabad has emerged as India's most affordable housing market with an EMI-to-income ratio of 23% in the first half of 2026. The property consultant's analysis shows that six of the country's eight largest residential markets remain within the affordability threshold, with only the Mumbai Metropolitan Region (MMR) and National Capital Region (NCR) breaching the 50% EMI-to-income ratio threshold at 69% and 67% respectively. The index measures the proportion of household income required to service equated monthly instalments (EMIs) on a home loan, with housing defined as affordable when a household spends 50% or less of its income on home loan EMIs. As per Knight Frank, Ahmedabad has consistently remained an end-user-driven market where housing demand is supported by relatively affordable prices, steady economic growth and improving infrastructure. The city's balanced price appreciation has ensured that homeownership remains accessible to a wider section of buyers, with Jaxay Shah from Savvy Group noting that sustained income growth and infrastructure-led development will be key to preserving this advantage.
Following Ahmedabad, the affordability rankings show Kolkata at 25%, Pune at 28%, Chennai at 29%, Bengaluru at 35%, and Hyderabad at 41%. As reported by Knight Frank, affordability remained broadly stable across most cities compared to 2025, with only Bengaluru's affordability weakening marginally from 34% to 35% and NCR deteriorating slightly from 66% to 67%. The remaining cities including Mumbai, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad maintained unchanged affordability levels. The consultancy noted that affordability gains have moderated mostly due to the rise in property prices, though healthy employment, stable incomes and supportive financing conditions continue to underpin demand. Weighted average prices of affordable housing rose 6-18% on-year in NCR and 3-5% in MMR, while the other six cities recorded 3-8% growth, as per Knight Frank's assessment.
The improved affordability is primarily attributed to the Reserve Bank of India's cumulative 125 basis points rate cuts, which have largely offset the impact of rising home prices. According to Knight Frank, the RBI has cut the repo rate by a cumulative 125 bps before pausing at 5.25% in its February and June 2026 monetary policy meetings. The consultant noted that affordability has improved steadily between 2016 and 2021, aided by lower interest rates during the pandemic, though the RBI's cumulative 250-basis-point repo rate increase between May 2022 and February 2023 eroded affordability. Stable interest rates since then helped arrest the decline, with the trend accelerating during the pandemic when the RBI cut rates to record lows. Currently, home loan interest rates in India start at around 7.1% for borrowers with strong credit profiles. The central bank has kept the policy repo rate unchanged at 5.25% in its February and June 2026 meetings, citing risks from the West Asia conflict, energy prices and uncertainty surrounding the monsoon.
Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, stated that housing affordability remains a key driver of residential demand with the cumulative benefit of lower interest rates continuing to support homebuyers across most markets, helping sales remain close to post-pandemic highs. The report expects affordability to remain broadly stable through the second half of 2026, supported by steady employment, urbanisation, income growth and a stable interest rate environment, though inflationary pressures and geopolitical uncertainties could impact sentiment. Baijal added that sustained income growth and balanced market fundamentals would be critical to maintaining housing affordability and supporting long-term growth in the residential market. Despite price increases, healthy incomes and supportive financing continue to fuel residential demand, keeping sales near post-pandemic highs.
