Study claims Mumbai as India’s most expensive city for homebuyers

Mumbai: Mumbai has been titled as India’s most expensive city to live in, as per a recent study by Knight Frank India. The study which examines housing affordability, speaks about the financial pressure that the residents of Mumbai have to face.

The Knight Frank Affordability Index measures the EMI-to-income ratio of a household in a particular city. For example, a Knight Frank Affordability Index of 30 percent for a city implies that households in that city have to spend about 30 percent of their monthly income to pay the EMI of their housing loan.

This ratio stands alarmingly high at 55 percent, making Mumbai the most expensive city. This implies that more than half of the average household’s income is spent on paying off home loan EMIs. This financial commitment poses challenges for people looking forward to buying houses in Mumbai.

The second most expensive city in the country is Hyderabad, with an EMI-to-income ratio of 31 percent. While the third spot is taken by the Delhi NCR at 30 percent, Tamil Nadu’s Chennai stands fourth with an EMI-to-income ratio of 28 percent. The fifth place is grabbed by Pune in Maharashtra with a ratio of 26 percent.

On the other hand, Ahmedabad in Gujarat has emerged as the most affordable city to live in. The EMI-to-income ratio stands at only 23 percent in the city.

The study also highlights the impact of interest rate changes on housing affordability. Over the past year, the RBI (Reserve Bank of India) has increased its key lending rate by 250 basis points. Subsequently, the EMI-to-income ratios have also risen by an average of 1-2 percent in the cities.